Advertising Demystified

17 Friday Apr 2015

Posted by Gregory Dean in Advertising, Marketing Philosophy, Marketing Strategy

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advertising media, Greg Dean, Gregory Dean, Marketing, Marketing Strategy, newspaper advertising, print media, radio advertising, television advertising

Begin with the communication objective

An advertising campaign starts by identifying a communication objective. One important issue is establishing the right combination of information to properly communicate the message and satisfy the communication objective. The advertising budget should be established before the creative strategy is written.

The creative strategy is the roadmap for the campaign.

A target audience is the keystone for a creative strategy. The objectives as well as the key benefits need to be defined in the creative strategy. According to Arens, Schaefer, & Weigold (2009), the detailed creative strategy consists of the following elements:

The basic problem the advertising must address.
The objective of the advertising.
A definition of the target audience.
The key benefits to communicate.
Support for those benefits.
The brand’s personality.
Any special requirements.

These elements represent seven important steps for writing a creative strategy. Each step needs supporting research and business decisions distilled into a clear and concise set of instructions to guide the creative team. At a bare minimum, a creative strategy should contain an objective statement, a support statement, and a tone or brand character statement.

Choosing the correct media for an advertising campaign

Before selecting the most effective media for an advertising campaign, the media planners and buyers need to be aware of the alternatives or options available. In addition, there should be a complete understanding of how the target audience accepts, reacts, and responds to the various media.

Special consideration is given to the reach and frequency of each medium (Arens, Schaefer, & Weigold, 2009). Reach is defined as the number of unique individuals that will be exposed to the advertising using a specific medium. Frequency is defined as the number of times a single member of the target audience will be exposed to the advertisement during the lifespan of the campaign.

In many cases, a media planner leverages several communication channels simultaneously as part of an overall cross-media campaign strategy. This approach is very effective when the selected media complement one another. For example, a broadcast email campaign works very well if coupled with a campaign-specific website. The recipient is already on-line when receiving the email message, so it makes sense to make the call-to-action a simple link to the online-advertisement.

Print, radio, television and more…

Print media, as with other communication channels, has several pros and cons. One advantage that print media has over the television and radio is that it is capable of delivering more detailed information. Moreover, the target audience has the opportunity to read and re-read the advertisement as well as pass it along to others. Print media also offers very good controls over target segmentation. For example, magazine advertising offers options for delivering targeted advertising in geographic and demographic specific editions of their publication. The downside of print advertising, particularly in newspapers and magazines, is the existence of competing advertising in the same publication. Magazine advertising is expensive compared to other print media communication channels.

Television advertising is known traditionally as the medium with the longest reach. The mass coverage of television advertising is appealing to companies needing to carry consistent messages across several geographic areas. Using sight, sound, motion, and color allows advertisements to be entertaining in addition to informative. One major problem with television advertising is with ad skipping technologies. Digital video recording devices (DVRs) are a household mainstay. Consumers are recording programs and watching them at their own convenience—skipping the commercials along the way. Production costs and lead-time to produce a television advertising are a disadvantage when compared to other communication channels.

Out-of-home, direct mail and specialty advertising

Advertisers leverage various forms of out-of-home media when the need arises to expand their market coverage beyond the reach of traditional marketing channels. Depending on the specific out-of-home medium, certain factors are considered before a campaign is deployed. Outdoor advertising, which encompasses several variations of billboards and bulletins, is considered to be a low cost alternative to traditional alternative to television, radio, and newspaper advertising. Covering more than 9000 markets across America, outdoor advertising gives advertisers the ability to rapidly reach any portion of their geographic market (Arens, Schaefer, & Weigold, 2009). The anticipated return on investment (ROI) is a consideration as each medium is compared for effectiveness. Message saturation and the cost for exposure is part of the metric used in determining the viability of a particular form of advertising.

Direct mail advertising is considered to be one of the most effective communication channels. Measurable results, such as response rates, are considerably more accurate in a direct mail campaign because of the targeted method of deployment. A well-formulated direct mail campaign consists of a targeted mailing list and variable, relevant messages. Outdoor and transit advertising rely on the target audience to pass-by or be passed by a marketing message. Direct mail advertising is delivered one-to-one to the intended audience. If the advertiser needs to deploy a campaign where the message needs to be unique to each recipient, direct mail using variable data driven content is the only solution. Newspaper advertisements are not unique to each reader. Television and radio advertisements are directed to a local, regional, or national audience with a common, non-personalized message at each level.

Specialty advertising serves a purpose beyond traditional communication channels. Premiums, for example, are used to enforce the brand or continue a message from other advertising efforts. My refrigerator is covered with magnets (specialty advertising) from various local television stations, pizza delivery companies, and insurance companies. You might also find a few desk calendars from local businesses in my home office.

Planning a media advertising campaign

Media planning, if not a science, is certainly an exercise in mathematics.

While I agree that creativity is an integral part of planning an advertising campaign, decisions on the placement and timing are equally as critical. Advertising is only effective when the intended audience is exposed to the message. Not just any set of eyes and ears, but the target audience. A media planner must consider many things simultaneously while constructing a plan to deploying an advertising campaign.

Media planning framework ensures the media plan is aligned with the advertising and marketing plans. Media objectives are goals derived from the advertising strategy. Audience objectives and message-distribution objectives are two major components of a media objective (Arens, Schaefer, & Weigold, 2009). The audience objective is the underlying definition of the target audience the advertiser intends to reach. The definition includes the demographic, psychographic, and geographic information of the audience. For example, targeting a certain age group in a campaign is considered an audience objective.

The advertiser’s ethical responsibilities

It is the responsibility of an advertiser to do what is morally acceptable by society. It is possible, as proven by Calvin Klein and Abercrombie & Fitch, to act unethically without breaking any laws (Arens, Schaefer, & Weigold, 2009). The morals of our society has been challenged and changed many times over. We would never have seen a television commercial during an episode of Leave it to Beaver featuring a scantily clad female eating a cheeseburger while washing a car. The personal value system of our society has become more tolerant and less traditional.

The advertising industry has several mechanisms in-place to help regulate and control the content of an advertisement. There are still a few irresponsible marketers who believe that it is easier to apologize than ask permission.

The agency responsible for spawning ethically challenged advertising does not suffer nearly as bad as the company represented in the offensive advertising.

Consumer groups can impact advertising by complaining directly to the company whose products are being touted inappropriately. I like the idea of self-regulation. When advertising agencies scrutinize one another, everyone benefits.

Expect a few critics

Responsible advertisers create advertising copy best suited to attract a target audience to a specific product or service, and at the same time maintain certain sensitivity to societal issues. Advertising is a part of society. In many cases, advertising influences society. The many cultures that makeup a society dictate levels of acceptance. Some advertising copy sparks interest from certain groups within a society, and at the same time offends others. Is this irresponsible advertising? Perhaps. I believe this is more of a case where the advertiser uses a targeted message, but chooses a media vehicle that crosses into markets outside the intended target. I believe that satellite radio, simply because of the broad reach, could cross cultural boundaries.

Public service announcements are by nature intended to be in the best interest of a society. However, all other advertising runs the risk of sparking controversy. Many complaints are centered on claims of false advertising or puffery. In contrast, some consumers are convinced that purchasing products that are frequently advertised decreases the risk of dissatisfaction. The theory is that a company in the public spotlight is less likely to misrepresent their products and services (Arens, Schaefer, & Weigold, 2009). Other criticism includes the idea that advertising affects the value of products, therefore creating an economic impact to a society.

References:

Arens, W., Schaefer, D., & Weigold, M. (2009). Essentials of Contemporary Advertising. McGraw-Hill Irwin, New York.

Multiattribute Theory and Wal-Mart

07 Wednesday Jan 2015

Posted by Gregory Dean in Marketing Philosophy, Marketing Strategy

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Cognitive dissonance, Consumer Attitude, Costco, Fishbein Model, Gregory Dean, Kmart, Marketing Strategy, Marketography, Multiattribute Theory, Sam's Club, Sears, Target, Wal-Mart

Wal-Mart has quickly become a worldwide retail behemoth. In the wake of their success, however, many of the Wal-Mart patrons have formed a love-hate relationship with the American-based juggernaut. Simply put, there are enough weighted advantages to shopping at Wal-Mart to dilute any ill feelings and incentives for consumers to shop elsewhere. A multiattribute attitude model exposes this phenomenon and helps explain the reasoning behind Wal-Mart’s loyal following.

It Starts With Consumer Attitude

A Wal-Mart consumer—as with any consumer—establishes certain attitudes towards the companies they frequently shop. An attitude, as defined by Solomon (2008), endures over time.

An attitude takes years to evolve, but a moment to change.

Consumers are beginning to realize the impact to the local community and economic state of their neighborhoods resulting from the success of Wal-Mart.

Cognitive dissonance explains the healthy percentage of Wal-Mart patrons that feel the stores are bad for our country, but continue to shop there (Basker, 2007). With 46 percent of Americans living within five miles of a Wal-Mart store, it is easy to understand the mix of love and cynicism towards the company. Many people believe that Wal-Mart, while good for helping consumers save money, is bad for free and competitive enterprise. Small niche retail stores cannot compete with Wal-Mart’s volume buying induced pricing.

The basic multiattribute approach for modeling attitudes uses attributes, beliefs, and weights as the basis for determining the propensity for a consumer to choose one option over another.

The Fishbein model also uses three components of attitude—salient beliefs, object-attribute linkages, and evaluation—for determining a measurable score representing a consumer’s attitude. Several attributes needed to fairly assess the popularity of Wal-Mart over several competitors include environmental responsibility and local economic sensitivity.

Using the Fishbein model, a comparison of Wal-Mart, Target, Kmart, Sears, Costco, and Sam’s Club against nine attributes shows which retail chains have the highest and lowest probability of success in a market based on specific weights assigned to the attributes. The priority, or importance, of each attribute weighted against the scored beliefs is used to calculate an overall score for each chain. The store with the highest score is recognized as having the most perceived differences in overall attitude. Table 1.1 shows how the multiattribute model can used to determine which entity has the most favorable attitude. The lowest score represents the company with a market of consumers with less disparate attitudes.

Note: In this hypothetical example, Wal-Mart scored the highest indicating that this particular shopper will have a higher propensity to visit their store over the others.

What does it mean?

The importance of each attribute carries the most impact compared to the other variables used in the Fishbein formula. Quality, variety, and product guarantees are the top three attributes in the hypothetical analysis shown in table 1.1. Companies, such as Wal-Mart, can use the results from a multiattribute analysis to help improve their image. In some situations, the information gleaned using a multiattribute model can be based on biased input. Before setting marketing direction based on multiattribute analysis, it is important to make sure the information is not skewed as a result of the halo effect (Beckwith & Lehmann, 1975).

Wal-Mart can capitalize on their advantages and perhaps add attributes to strengthen their position in the market. However, with the importance of customer loyalty and retention lurking in the shadows, it may just be smarter to concentrate efforts on the attributes deemed the most important by their target audience. There is a certain amount of tolerance with the shopping public which seems to be tested each time a new story is revealed regarding Wal-Mart’s mistreatment of employees. Target is only a few discounted prices away from winning over several Wal-Mart loyalists.

References

Basker, E. (2007). The causes and consequences of Wal-Mart’s growth. The Journal of Economic Perspectives [Electronic version]. Retrieved January 7, 2015, from http://www.jstor.org/stable/30033740

Beckwith, N., & Lehmann, D. (1975). The importance of halo effects in multi-attribute attitude models. Journal of Marketing Research. [Electronic version]. Retrieved December 28, 2014, from http://www.jstor.org/pss/3151224

Solomon, M. (2009). Consumer behavior buying, having, and being (8th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

What is Advertising’s Role in Business?

20 Friday Jul 2012

Posted by Gregory Dean in Marketing Philosophy, Marketing Strategy

≈ 1 Comment

Tags

Advertising history, advertising media, Gregory Dean, Internet advertising, magazine advertising, Marketing, Marketing Strategy, Marketography, newspaper advertising, print media, radio advertising

Sometimes we forget basics. Advertising as a non-personal, paid communication about products (Arens Schaefer, & Weigold 2009). Advertising has an important role in business. Without advertising, many great products would be the world’s best-kept secrets.

Advertising allows businesses to ‘spread the word’ about their products and services.

Sometimes the message is designed for the masses, and in other cases a more strategic approach is used to deliver advertising in a more controlled environment. Advertising gives businesses a competitive advantage. Businesses use different forms of advertising leveraging various media to raise public awareness regarding their products. Advertising is the only way for businesses to tout their product’s uniqueness and differentiate themselves from their competition.

Advertising can take many forms. Each form, method, or technique can be used across several simultaneous marketing channels and advertising conduits. For example, comparative advertising as part of a marketing campaign can run concurrent in print, on television, radio, and the Internet. Advertising is one part of a cohesive marketing mix. Specifically, advertising falls under “promotion”—one of the 4 Ps of the marketing mix. Businesses are constantly seeking new ways to advertise.

References:

Arens, W., Schaefer, D., & Weigold, M. (2009). Essentials of Contemporary Advertising. McGraw-Hill Irwin, New York.

Choose a Marketing Strategy

28 Monday May 2012

Posted by Gregory Dean in Marketing Strategy

≈ 2 Comments

Tags

cost leader, cost-leader strategy, differentiation, differentiation strategy, focus, focus strategy, Gregory Dean, Marketing, Marketing Strategy, Marketography, target marketing

All too often, organizations struggle to choose a marketing strategy that best fits their overall goals and objectives. Sometimes the strategy for a given product or service will be in complete contrast to other marketing strategies within an organization. It is perfectly acceptible to use different strategies–across the product portfolio–to help springboard a particular product into the spotlight. Remember, speed to market is crutial. The cost-leader strategy, differentiation strategy, and focus strategy each offer unique advantages.

Cost-Leader Strategy

The Cost-Leader Strategy is the strategy a firm follows to become a leader in market share. Basically the strategy focuses providing the product to the market at the lowest cost. Every action the firm takes is designed to lower the cost of delivering the product to the consumer ensuring the firm maintains the high volume turnover require in this strategy. As a result this strategy also requires the firm to constantly monitor competitive challenges and quickly responding to these challenges by anticipating them and using its cost advantage to dominate its competitors. New technologies and innovations are quickly adopted to lower production costs and increase its advantage in the marketplace.

This aggressive approach to remaining the market leader requires the firm to constantly expand the total market by seeking new users, new uses for the product and encouraging current users to use more of the product. All of these focuses will serve to increase quantity demanded resulting in still lower costs through economies of scale allow the firm to reinforce its dominance in the industry. Wal-Mart is the classic example of this strategy in action.

Differentiation strategy

The Differentiation Strategy is based on exploiting identified weakness in the position of the cost-leader or other firms in the marketplace. These might be consumer dissatisfaction with the choices available, customer services or quality of the product offered by the Cost-Leader. The firm that is following the Differentiation Strategy than develops an aggressive strategy designed to exploit this weakness and gain market share at the cost of either the Cost-Leader or other weaker firms. Target is an excellent example of this strategy countering with smaller, friendlier stores easier for the customer to navigate when in a hurry.

Focus strategy

The Focus Strategy is a strategy based on avoiding competition with the major firms in the industry by focusing on serving niche markets too small for the large firms to exploit economically. Usually these are specialty markets that are too dispersed or fragmented for a large firm to serve profitably. Often they are isolated geographically or require a special knowledge of products and market demographics. The firm then focuses on making itself master of this niche but building a value chain based on its unique needs. The Gap succeeds with improved quality and selection in the clothing field it specializes in.

Choose the marketing strategy that will bring the most success to your organization. Considering there is only one cost-leader in each industry, most companies choose a differentiation strategy. This means, of course, that you will be going toe-to-toe with the competitor with the lowest price. In this scenario, do not compete on price. Prove why your products and services are better–and enjoy the success.

Complex Campaigns Can Benefit From Project Management

04 Wednesday Jan 2012

Posted by Gregory Dean in Marketing Strategy, Marketing Technologies

≈ 2 Comments

Tags

Campaign Management, Greg Dean, Gregory Dean, Life Cycle, Marketing Strategy, Marketography, Project Management

Complex cross-media marketing campaigns require a well-organized symphony of coordination and scheduling. Formal project management techniques can greatly increase the timeliness, efficiency, and profitability of a direct marketing campaign. With so many moving parts, it makes sense to leverage traditional project management techniques to command control and guarantee speed-to-market.

In nearly every aspect of our lives, we organize tasks into simple to-do lists. A typical day can be filled with chores and activities identified by an objective and a due date. A formal project—no matter how small—shares common characteristics with larger and more complex projects. In each case, the organization and structure of project management offers the framework necessary for these projects to succeed—on time and within budget. Project management can be scaled to match the scope and complexity of a project. The overall methodology and discipline, as defined in this paper, has become the main ingredients in the recipe for success.

What is Project Management?

A project can be defined as a series of interrelated tasks with a clearly identified timeline and predetermined costs. Larson & Gray (2011) describe a project as a temporary endeavor with an established objective (pg. 5). Moreover, a project has a start date and an end date, predetermined costs, and involves doing something never before realized. The predetermined timeline encompasses a project life cycle. Overseeing the project life cycle is the foundation for project management.

Project management is the coordination and day-to-day direction throughout the stages of a project life cycle. Specifically, project management is the planning, organizing, and directing of tasks and resources for a relatively short-term objective (Hanford, 2010). With an ever-changing, competitive, and fast-paced environment, it is imperative for businesses and organizations to leverage project management for effectively monitoring initiatives and ensuring success.

Speed to market is sometimes the competitive edge that a company needs to make the leap from market follower to market leader.

Project management offers an organization the ability to have higher success rates with lower uncertainty and costs associated with a project (Manu, 2007). In short, project management means an overall product life cycle can be reduced resulting a competitive advantage for an organization. Project management is an important tool for businesses to translate strategies and objectives into realities.

The Project Life Cycle

The individual phases of a project are organized into a project life cycle. The project life cycle is comprised of several stages. The number of stages varies based on the type of project or specific industry (Larson & Gray, 2011, pg. 7). The basic project life cycle consists of four stages: defining stage, planning stage, executing stage, and closing stage. Project life cycle management is a granular approach for controlling the logical sequence of activities as defined by a project scope.

Undefined requirements, miscommunication, and lack of sponsorship all contribute to failed projects. A structured project life cycle approach supports a clearly defined scope and objectives while offering the best chance for achieving the project goals. A large percentage of projects fail to deliver because organizations often downplay the importance of project life cycle management. Regardless of the methodology, organizing a project into stages and identifying a project plan derived from a comprehensive project life cycle guarantees success.

During the defining or planning stage, a project undergoes an initiation process. Part of the initiation process includes the challenging task of defining the overall business opportunity (Westland, 2007, pgs. 3-4). In some cases—as it relates to innovative technology-centric projects—the business opportunity can be subjective. The trailblazing Apple iPhone project in 2007 redefined the traditional project life cycle methodology to include a significant research and development initiative to help prove the business opportunity. Without the ability to draw upon previous experience, and particularly market acceptance, Apple’s definition of the business opportunity surrounding the iPhone was assumed (Müller, 2010).

An innovative product, such as the Apple iPhone, requires a unified approach to project management. One slight misstep in any of the project life cycle stages could be the difference between a history-making product launch and an overall corporate embarrassment. Regardless of the chosen methodology, every project life cycle includes a planning phase as the first stage of the project. As proven time and time again by companies such as Apple—planning, research, and critical thinking in the early stages of a project makes for a more effective execution stage. Apple’s 10-to-3-to-1 approach to product research results in a single product design from which a formal project life cycle is developed (Walters, 2008). Critical thinking and research is mandatory in the development of a project life cycle. The planning stage of a project is the foundation for all subsequent stages. Schedules, budgets, and resources are determined at this stage of the project life cycle. A miscalculated budget or misaligned resources can be fatal to a project and devastating to a company and its reputation.

Project Organization

Once designed, planned, and accepted by management, a project must be organized. Three common project management structures used to implement projects are: functional organization, dedicated project teams, and matrix structure (Larson & Gray, 2011, pg. 65). Projects do not fit within the normal framework of an organization. A project by definition has a predetermined time to live, and therefore in conflict with an organization’s day-to-day management of ongoing activities.

The structure and organization required for effective project management is alien to many traditional companies. Regardless, the organization must adopt a structure that will have the least impact on corporate culture. Integrating a project into the existing management framework of an organization provides a high level of flexibility. One notable downside to organizing projects within the functional organization is the pace at which the project moves. Projects take longer to complete when communication follows normal management channels.

In contrast, organizing projects as dedicated teams eliminates the extra layers of management and streamlines communication. The results are faster turn-around times and a unified project team. The cost of a dedicated team, however, sometimes outweighs the benefits. A matrix arrangement leverages the advantages of functional organization and dedicated teams approaches to create a hybrid structure. The three different matrix forms are: weak matrix, balanced matrix, and strong matrix (Larson & Gray, 2011, pgs. 73-74).

Organizational culture is a company’s fingerprint in the industry. Organizational culture is the defining characteristic of a company—it cascades across all projects. An organization’s culture is many times a reflection of its leaders. Leadership is crucial in an organization. A project manager is in a position of leadership. There is a distinct difference between project management and project leadership. As the leader of a project, a project manager can exercise leadership by inspiring and motivating the teams, and by understanding the bigger picture.

Sponsorship is vital in a project. A project sponsor is one of many stakeholders with an active interest in a project. The project sponsor is the liaison between the project manager and the executives. In certain cases when it becomes necessary to acquire more resources or change direction, a project sponsor would most likely be responsible for final approval. Successful projects share a common trait. They all have a strong and common bond between the project manager and project sponsor. Open communication between these two individuals is essential.

Project Team

The five-stage team development model provides the framework for project managers to build an effective team. The five stages defined by Larson & Gray (2011) include: forming, storming, norming, performing, and adjourning (pgs. 377-378). The goal of a project manager during the team-building phase of a project is to develop a cohesive group of individuals with a positive synergy. In an idea situation, a project manager would draw upon a pool of unlimited resources to choose candidates with strong compatibility and cohesion. In lieu of a perfect world, project managers yield to the effectiveness of the five-stage model to develop his or her team.

Before the project team begins the five-stage development process, a recruiting and selection process must take place. Choosing the most capable individuals for a project team ensures success (Kristoff, 2008). A project manager must understand the specific needs of the project before selecting individuals for the project team. Additionally, a project manager should consider the schedule and be sensitive to the pace at which each team member performs. Some team members, while a perfect match for a particular task, might not work comfortably at a pace required by the project timeline.

Work Packages

Objectives, deliverables, and milestones are the first three elements of a project scope. Defining the project objective is the single most important step in developing a project scope.

A well-defined project scope is used to establish a priority matrix. The priority matrix is an effective tool for establishing project priorities. Once the priorities are determined, the project manager can create a work breakdown structure (WBS). The work breakdown structure is a detailed outline of the project. Creating a hierarchical framework of the elements within a project provides a project manager the ability to manage specific costs and efforts associated with each deliverable or subdeliverable.

Project deliverables are known as work packages. Work packages are the most granular level of a work breakdown structure. The project is at the highest level, followed by the deliverables. Each deliverable can have one or more subdeliverables. The work packages of a project can be managed, tracked, and budgeted independently. This allows a project to easily be distributed across virtual teams if necessary. A project manager needs to be aware, however, of work packages that are on the project’s critical path. Any time delays or constraints to tasks on the critical path will affect the overall timeline.

Project Management Software

There are several software packages to help organize and manage projects. Microsoft Project, for example, offers all of the tools and reporting that a project manager would need to handle even the most complex projects. In situations where several projects are running concurrently as part of an overall program, a project manager can manage the project portfolio. Project management software makes if possible to create a work breakdown structure, estimate and manage schedules and costs, and monitor activities.

Managing risks is an important aspect of project management. Project management software provides mechanisms for assessing risks. Change control is often an area for exposing project scope creep. The change control management features in Microsoft Project help track changes and report the cost and time impact a change will have on the overall project. Large integrated projects will benefit from the use of project management software. The reporting capabilities alone will justify the costs.

Project management structure, methodology, and techniques can be applied to any type of project—no matter the size. Every project shares the common characteristics of a beginning and end date, defined set of deliverables, and an overall objective. Project management brings organization and framework to the project to help ensure success. While every aspect of traditional project management may not apply to all projects, the basic principles remain effective and relevant for every situation. Marketers are not exempt from the challenges of budgets, timelines, and competing priorities. Apply project management techniques to gain a competitive edge.

References

Hanford, M. (2010). Program management: different from project management. Retrieved March 5, 2011, from http://www.ibm.com/developerworks/rational/library/4751.html

Kristoff, S. (2008). Building a successful project team. Retrieved March 7, 2001, from http://www.suite101.com/content/building-a-successful-team-a41946

Larson, E., & Gray, C. (2011). Project management: the managerial process. New York: McGraw-Hill/Irwin

Manu, K. (2007). The importance of project management in organizations. Retrieved March 7, 2011, from http://www.articlesbase.com/leadership-articles/the-importance-of-project-management-in-organizations-246928.html

Müller, C. (2010). Apple’s approach towards innovation and creativity. Munich: GRIN Publishing GmbH

Walters, H. (2008). Apple’s design process. Retrieved March 6, 2011, from http://www.businessweek.com/the_thread/techbeat/archives/2008/03/apples_design_process.html

Westland, J. (2007). The project management life cycle. Philadelphia: Kogan Page

Vitamin Enhanced Water Could Make a Bigger Splash

28 Tuesday Jun 2011

Posted by Gregory Dean in Marketing Strategy

≈ 1 Comment

Tags

Bottled Water, clustered water, Coca-Cola, flavored water, gatorade, Glaceau, Gregory Dean, Marketing, Marketing Strategy, Marketography, Research, target marketing, Vitamin Water, VITAMINWATER

There is a global opportunity for companies producing vitamin enhanced water, but do the marketing executives see it? China is the second largest market for energy drinks in the world. According to research by Zenith International (2009), the United States and Canada combined to consume 37% of the overall volume of energy drinks in 2008 (Just-Drinks.com). The Asia Pacific region boasts 30% of the global volume.

With a strong distribution channel, competitive pricing, smart positioning, and aggressive advertising Glaceau VITAMINWATER^® enhanced water can become the number one energy drink in China.

Overall sales of energy drinks worldwide have doubled in the last five years (Roethenbaugh, 2009). Clever marketing and product positioning has blurred the line between energy drinks and the six categories of water that struggles to compete in the same market. Flavored waters muddy the market with nothing more that bottled water with a twist. Clustered water, the latest version of ultra purified H2O, has yet to take hold. Fitness and oxygenated waters appeal to athletes and casual gym patrons. Premium waters are typically enjoyed at fine restaurants as an alternative to tap water. Vitamin enhanced waters are targeted to health conscious individuals.

The market leader in energy drinks manufactures and distributes a product containing high levels of caffeine. The public perception is that caffeine is the most effective stimulant for energizing your mind and body. However, other energy drink companies have made attempts to make a splash in the market by using energy boosting ingredients such as green tea and ginkgo biloba (AllBusiness.com, 2005). These particular products find themselves competing with soft drinks, smoothies, and iced teas for market share—and as a result, barely providing competition for the caffeine based products.

The most compelling statistic that would encourage Glaceau to re-position their VITAMINWATER^® enhanced water in the energy drink market is the 12% annual growth prediction taking sales to over $9 billion dollars in the U.S. (ReportBuyer.com, 2007). Based on this prediction, and the knowledge that the Asia Pacific market enjoys similar sales forecasts, the timing is perfect for Glaceau VITAMINWATER^® enhanced water to enter this new market. The industry for bottle waters, fitness drinks, and enriched waters is flourishing. PepsiCo cites the declining popularity on carbonated soft drinks is partly responsible for the increase in sales of their sports drink, Gatorade (Farrell & Rappeport, 2010).

The largest segment for the VITAMINWATER^® enhanced water product in the Asia Pacific market is in China. The most recent census data shows the average total consumption expenditure for a Chinese family is 7142 Yuan, or approximately $1,053 U.S. dollars (Coutsoukis, 2004). Nearly 38% of the total expenditure is on food. Based on this information alone, Glaceau should be skeptical when deciding whether or not the market can sustain the energy drink business. One existing company has a proven track record in the Asia Pacific market.

Red Bull, the world’s leading manufacturer of energy drinks, has enjoyed several years of success in China. However, their flagship product is targeted specifically to males between the ages of 18 and 24 (Yates, 2008). Glaceau VITAMINWATER^® enhanced water, with a slight product repositioning, can cast a wider net and attract a strong target audience comprised of males and females between the ages of 18 and 49. China has approximately 700 million people that fall within this demographic model. Many, of course, do not have the income to justify purchases outside of the bare essentials. However, companies currently with market saturation have isolated the target audience.

Constant adjustments to the U.S. – China trade agreements need to be considered when planning a manufacturing and distribution strategy. There have been several talks within the last few months regarding trade barriers (Lawder, 2010). Depending on the outcome of the trade agreements between the United States and China, Glaceau may need to establish production and distribution within China as opposed to exporting the VITAMINWATER^® enhanced water product from the United States.

A few trade sectors in China are suffering from overcapacity (Gunn, 2010). The overcapacity is mostly within the industrial and commercial sectors. Environmental issues and increasing social tension are a few current weaknesses that should be monitored, but not distract from the plan to introduce VITAMINWATER^® enhanced water to the Asia Pacific market. China’s overall economic position is strong—boasting a $53 billion dollar surplus in the first quarter of 2010.

The China Food & Drink Report (2010) exposes one of China’s weaknesses as their under-developed agriculture and distribution system (Business Monitor International). Moreover, the health scares with products produced in their own country has opened a door for imports. The timing could not be better for Glaceau VITAMINWATER^® enhanced water to spring into the spotlight, and begin an aggressive campaign to dominate the energy drink market.

The Chinese government is overwhelmed with issues regarding the environment. While the 8% average growth has enhanced the standard of living for the population, it has also contributed to their environmental challenges. Any company, regardless of origin, with the intent to develop a manufacturing facility in China will find most of the opposition coming from special interest groups. Glaceau must continue to monitor and assess political risks. Coca-Cola Company has been conducting business in the Asia Pacific market for many years. Their experience in this area will help foster the necessary relations with key government officials and organization for success.

Glaceau is a privately owned subsidiary of Coca-Cola Company. The company began manufacturing enhanced waters in 1998. The Smartwater product, an electrolyte enhanced water, is the foundation for the VITAMINWATER^® enhanced water product. Glaceau VITAMINWATER^® enhanced water is produced in eleven flavors and enriched with energy enhancing natural ingredients and vitamins. VITAMINWATER^® enhanced water is positioned to compete with traditional bottled water, sports drinks, and flavored waters. The brand is recognized world wide as simply another variation of enhanced bottled water.

Glaceau has positioned its VITAMINWATER^® enhanced water product as a healthy alternative to soda. However, the Asia Pacific market currently perceives VITAMINWATER^® enhanced water as a product for the affluent. VITAMINWATER^® enhanced water in the Asia Pacific market is available in upscale restaurants and high-end retail outlets. This is in complete contrast to the public perception of the same product in North America. The company acknowledges the need to tap into a market with the potential to dwarf sales in other global markets.

What if, and at the same time, VITAMINWATER^® enhanced water is re-positioned as an energy drink?

The competition for energy drinks in China is far less crowded than with specialty waters. This is unexpected considering that caffeine-based energy drinks originated in Japan and Thailand (AllBusiness.com). The Austrian-distributed drink, Red Bull, has dominated this category for several years. Glaceau can make a strong impact and at the same time broaden the definition of energy drink to include healthy alternatives. Health conscious consumers, regardless of location, would cross over to create a new market.

All mind and body stimulating energy drinks that would compete with VITAMINWATER^® enhanced water in the Asia Pacific market contain caffeine. Glaceau boasts no artificial flavors, colors, are any chemical stimulants as contained in the products of the competitors. Glaceau can leverage their all-natural approach as the differentiator that will eliminate the caffeine-based products from the competition. The current VITAMINWATER^® enhanced water product line will not be adjusted or altered for the Asia Pacific market, but rather re-positioned as a healthy alternative energy drink.

There are over 500 energy drink products worldwide. Five producers dominate the market share. Red Bull is the leader with 42.7% overall sales. Hanson Natural, the manufacturer of Monster brands has 16% of the market. PepsiCo has pushed their SoBe and Amp products to an impressive 13.2%. Rockstar International enjoys 12% and Full Throttle by Coca-Cola has 10% of the market (Simon & Mosher, 2007).

Each of these producers of energy drinks leverage caffeine as their main ingredient. Glaceau VITAMINWATER^® enhanced water, repositioned to compete in the energy drink market, would enjoy immediate success by attracting health conscious energy drink consumers. The assumption is that many consumers remain leery of the chemical-based energy drink, and because there are no alternatives choose to consume the caffeine riddled energy drinks. There is little competition in the energy drink market for products that bring a healthy natural alternative to the mix.

Glaceau VITAMINWATER^® enhanced water has a strong global presence, with the exception of the Asia Pacific market. This is due mostly to the fact that the product was perceived by the Asian population as an upscale water only available to the affluent. In all fairness to the consumers, without a marketing plan to properly position the product—there would be no reason to think otherwise. The strategy is to create a drink category that attracts consumers from both the energy drink category and the fitness water category.

Better positioned as an energy drink, Glaceau VITAMINWATER^® enhanced water can make an immediate impact to the Asia Pacific market by advertising the differentiator. VITAMINWATER^® enhanced water is an all-natural alternative to the chemical laden products in a can. Unlike other energy drinks, VITAMINWATER^® enhanced water is safer for a broader age group. Energy should be replaced naturally. With Glaceau VITAMINWATER^® enhanced water, you can reenergize and “harness your energy—naturally.”

References

AllBusiness.com (2005). In the energy drinks market by 2009 the United States is expected to have the largest market. Business Wire. [Electronic version] Retrieved July 21, 2010, from http://www.allbusiness.com/consumer-products/food-beverage-products-nonalcoholics/5178192-1.html

China Food & Drink Report – Q3 2010. (2010). Business Monitor International. [Electronic version] Retrieved July 26, 2010, from ProQuest: http://proquest.umi.com/pqdweb?index=7&did=2062171471&SrchMode=1&sid=4&Fmt=2&VInst=PROD&Type=PQD&RQT=309&VName=PQD&TS=1280177041&clientId=74379.

Cateora, P. & Graham, J. (2007). International marketing. New York: McGraw-Hill Irwin.

Coutsoukis, P. (2004). Per capita annual living expenditure of urban households (2004) – China statistics census. Retrieved July 24, 2010, from http://www.allcountries.org/china_statistics/10_7_per_capita_annual_living_expenditure.html

Farrell, G. & Rappeport, A. (2010). PepsiCo net income falls 3%. Financial Times. [Electronic version] Retrieved July 26, 2010, from ProQuest: http://proquest.umi.com/pqdweb?did=2087426421&sid=1&Fmt=3&clientId=74379&RQT=309&VName=PQD

Gunn, N. (2010). Coface’s China country rating and business climate rating. Retrieved July 21, 2010, from http://import-export.suite101.com/article.cfm/cofaces-china-country-rating-and-business-climate-rating

Just-Drinks.com (2009). Energy drink sales hindered by Thai decline – research. Retrieved July 20, 2010, from http://www.justdrinks.com/analysis/energy-drink-sales- hindered-by-thai-decline-research_id98736.aspx

Lawder, D. (2010). US-China talks to focus on trade barriers—Geithner. Retrieved July 26, 2010, from http://www.reuters.com/article/idUSNLLIGE64020100518

ReportBuyer.com (2007). New report predicts energy drink sales in the U.S. to exceed $9 billion by 2011. Retrieved July 20, 2010, from http://www.reportbuyer.com/press/new-report-predicts-energy-drink-sales-in-the-us-to-exceed-9-billion-by-2011/

Roethenbaugh, G. (2009). Global energy drinks market 2003-2008. Retrieved July 25, 2010, from http://www.researchandmarkets.com/reports/c29596

Simon, M. & Mosher, J. (2007). Alcohol, energy drinks, and youth: A dangerous mix. Retrieved July 20, 2010, from http://www.marininstitute.org/alcopops/energy_drink_report.htm

Yates, D. (2008). Is coffee an old man’s beverage? Retrieved July 21, 2010, from http://www.energydrinkreviewer.com/

Public Relations: The New Marketing Ethos

04 Friday Feb 2011

Posted by Gregory Dean in Marketing Strategy

≈ 2 Comments

Tags

advertising media, ethos, four ps of marketing, Greg Dean, Gregory Dean, Marketing, marketing channels, marketing communications, marketing mix, Marketing Research, Marketing Strategy, Marketography, public relations, Research, social marketing, social media

Many paradigm cases of public relations, advertising, and marketing activities exist to provide a basis for believing there are few differences between them. Advertising and public relations are individual instruments of marketing. Both have strengths and weaknesses, and each has a specific purpose. However, the gap between advertising and public relations is closing. Eventually, there will be more similarities than differences—and as a result, public relations tactics will take the place of traditional advertising methods.

Social Media is a Marketing Conduit

The popularity of social media is largely responsible for the convergence of public relations and advertising. Social media communication channels are accelerating the inevitable overlap in definition between public relations and advertising. Public relations activities are a form of marketing. Public relations communicates information about a company and its products and services—but from a neutral, broad, human-interest perspective. Whereas, advertising is more focused on a persuasive, non-personal marketing communication (Arens, et. al., 2009, p. 4). Both methods of marketing, however, require viable and effective communication channels.

Social media is quickly becoming the desired conduit for social marketing. Companies selling ideas, attitudes, and behaviors as opposed to products and services first realized social marketing in the 1970s. Social marketing and public relations are both designed to influence a target audience or general society. Social media—not available in the 1970s—has given public relations professionals a conduit to their publics. Social networking has extended the principles of marketing and redefined the marketing mix.

The four ‘P’s of marketing—product, price, place, and promotion—are joined by four additional ‘P’s. Marketing communications across social media channels require and understanding of the expanded marketing mix. The social marketing ‘P’s include publics, partnership, policy, and purse strings (Weinreich, 2010). A social marketing or public relations ‘public’ is the target market, special audience, or segment of the general public identified by an organization. Market research is often used to isolate and group individuals for the purpose of targeted marketing communications.

Social media channels, as with most Internet-based communication conduits, are easy to penetrate but difficult to control. While it is simple for public relations professionals to participate in social media activities—such as forums, blogs, and moblogs—it is impossible to control access to the content. Moreover, the Internet encourages content sharing and site linking making it difficult to know exactly who is ultimately at the receiving end of a social media communication.

Public relations strategies include providing honest, objective information to various publics through effective communication channels (Shauib, 2011). Social media has evolved from a communication channel to a marketing conduit. Press releases, one of the most effective tools for a public relations agent, provides one-way communication to a company’s publics. Social media, however, includes mechanisms that will allow the publics to communicate back to the company. Similarly, brands are using social networking to create goodwill with its consumers and prospects by encouraging an open dialog between the company and the consumer.

Social media bolsters partnerships between businesses with complementing products or services. Partnerships and strategic alliances can amplify brands, enforce messages, and influence public opinion. Kellogg Company, for example, partnered with the National Cancer Institute to raise awareness by showing the relationship between eating habits and the likelihood of contracting cancer (Caywood, 1997, p. 439). Social media is an excellent communication channel for cause-related marketing.

Policy, one of the social media specific ‘P’s in the marketing mix, takes place when a public relations message motivates individual behavior or influences change. The use of public relations in education and Government organizations is primarily for public persuasion. A public relations professional can leverage social media channels to communicate information about the current policies of government agencies (Cameron, et. al., 2008, p. 408). If successful, promoting policies through social media communication channels will encourage support from the people.

When social media is used to raise awareness for non-profit and cause-related organizations, there is usually a strong message that pulls on the heartstrings. At the same time, a compelling call-to-action pulls on the purse strings. Social service organizations rely on public relations marketing to not only develop public awareness and recruit new members, but also raise and replenish operating funds. Fund-raising events are critical to the longevity of a non-profit organization.

Not all press releases are the same

While social media channels deliver public relations marketing messages to target audiences in real-time, the approach and composition of a message for social media is different than traditional press releases (Dubois, 2010). Public relations is quickly becoming the marketing approach of choice for businesses of all sizes. A public relations professional relies heavily on the traditional press release to compliment other public relations activities.

The use of social media to deliver press releases moves public relations ahead of traditional advertising as an effective marketing communication option. Any communication—press release or otherwise—requires a different strategy when delivered using an online method. Every online communication should be designed for two-way communication. Dean Guadagni (2009) identifies the three common non-interactive as: broadcasting, announcements, and crowdsourcing. However, crowdsourcing offers a feedback loop between consumers and businesses.

A press release or other marketing communication deployed across Internet channels should always be positioned as an interactive communication. Not only should the message engage the audience, but also all interaction should be acknowledged and an open dialog created. A company can glean information about their publics by offering surveys and polls as part of the message strategy. Additionally, feedback from the target audience presents a company with insight into the psyche of their customers. Social media—when used for marketing communication—should not be exempt from targeted communication strategies.

Target audiences, market segments, and defined publics are unique groups that can impact the company’s goals. The process of identifying a target audience for public relations and advertising is similar. A public relations professional defines his or her ‘publics’ by using traditional methods of gathering data through primary research. This approach can be expensive, but the results are specific to the business needs. In other words, primary research approaches—such as focus groups, surveys, interviews, and observation—allow companies to identify and learn more about their target market.

Secondary research is less costly and easier to obtain. The results, however, may not be as accurate as information gleaned from primary research. Secondary research is typically a great way to quickly identify a target audience. Basic demographic, psychographic, and geographic information is important for understanding the ‘anatomy’ of the members in a target audience. This information alone is enough to develop communication strategies across social media channels, but a physical address, email address, or phone number is necessary for a direct marketing communication.

Both advertising and public relations use a mass marketing or broadcast approach to deliver messages to their respective target audience. A public relations professional will cast a wider net than an advertising professional when identifying their publics. A segmented public encompasses the target audience, but also includes secondary audiences, policymakers, and gatekeepers (Weinreich, 2010). A public relations campaign is intended to create goodwill for a product, company, or cause. One common goal of both advertising and public relations is to communicate with the target audience or segmented public in a language best understood.

Advertising is Becoming Less Effective

Every successful message strategy begins with an effective use of language. Whether the marketing campaign uses advertising methods or public relations tactics, the message must be written specifically for the intended audience. The clarity and simplicity of a message has a direct impact on the success of the communication. Jargon and clichés should always be avoided. A public relations message can lose credibility if euphemisms or discriminatory language is used (Cameron, et. al., 2008, p. 150).

Advertising messages do not carry the same credibility as pubic relations messages. Consumers know that advertisements are designed to sell a product or service. Most consumers have become callused against catchy slogans and gimmicks, leaving the door wide open for public relations style communications to replace traditional advertising. The writing styles between an advertising copywriter and a public relations writer is vastly different. Advertisements typically concentrate on a single benefit of a product or service. Public relations materials are written in a journalistic style, while offering more in-depth information about a company, product, or services (Mathlesen, 2010).

While advertising continues to have its place in the marketing toolbox, public relations is proving to be a more versatile solution. Toyota Motor Corporation experienced first hand the issues surrounding the use of advertising in a situation better suited for public relations. In March 2010—in the wake of public concern over safety issues—Toyota spawned an advertising campaign designed to promote brand loyalty and build retention. The problem, however, was that Toyota failed to address specific concerns surrounding congressional inquiries and safety investigations. Moreover, Toyota did not seem humbled by the problems and made no effort to apologize to their customers (Fredrix, 2010).

Toyota’s advertising arrogance had a negative impact on their loyal following. A public relations campaign would have provided the goodwill needed at a time when the public was unsure about the company. Additionally, public relations becomes the credibility conduit between the consumer and the company. The public trusts anything written in a press release or other public relations communication. Ford Motor Company was faced with similar challenges in 2000 when many Bridgestone tire clad Ford Explorers were responsible for over 250 traffic deaths. Ford chose to reduce their advertising efforts until the public trust was regained.

The general public is skeptical of advertising. Advertising is considered self-serving and ineffective. Branding is an important part of marketing. Public relations tactics continue to be more effective than advertising for building brands. The top five brands according to The Economist magazine are Google, Apple, Coca-Cola, Starbucks, and Ikea. In contrast, the top five advertisers are, General Motors, Proctor & Gamble, Ford, PepsiCo, and Pfizer (Elliott, 2010).

Public relations offers credibility, clarity, and cost advantages over advertising. The public has weathered advertising promises for many years. No matter how cleverly disguised, an advertisement is still designed to sell. The journalistic approach of public relations messages creates a newsworthy credibility that will never exist in advertising. Claims and comparisons sometimes cloud the underlying intention of an advertisement. A public relations message is always clear, concise, and directly to the point.

One of the greatest advantages of public relations over advertising is the cost. Marketing publicity is a form of public relations that involves getting stories published about a company’s products and services. Each product inherits the credibility of the publication. Consumer Reports, for example, is known for unbiased reviews and comparisons of thousands of consumer products. Several magazines and websites specialize in restaurant and travel reviews. All of this publicity is impartial and free.

Public relations is viral. A public relations campaign can be spread across many communication channels simultaneously. Social media offers additional advantages to public relations over advertising. Word of mouth communication is commonplace on the Internet. With a single click of the mouse, a consumer can easily share information and opinion about a product or service to thousands of individuals.

For years, the words advertising and marketing were synonymous. The recent economic challenges have forced consumers to make cutbacks on products and services. Advertisers are creating more aggressive campaigns in hopes of creating a spending frenzy. In the aftermath of government bailouts and mass media coverage of mismanaged corporations, the public is desensitized to advertising. Companies need to bring themselves into the public spotlight and win the trust of their target audience. Public relations produce goodwill in the company’s various publics (Turney, 2001).

Public relations activities blaze the trail so that advertising is more effective. Moreover, advertising is more effective if following a public relations campaign. While advertising cannot perform the same function as public relations, marketing campaigns using public relations tactics can accomplish the goals of traditional advertising—increase sales and raise company or product awareness. Advertising will always be an important instrument of marketing. Public relations is proving to be a viable alternative to traditional advertising, and the lines between the two are fading. Public relations has supplanted advertising and quickly become the new marketing ethos.

References

Arens, W., Schaefer, D., & Weigold, M. (2009). Essentials of contemporary advertising. McGraw-Hill Irwin: Boston.

Cameron, G., Wilcox, D., Reber, B. & Shin J. (2008). Public relations today: Managing competition and conflict. New York: Pearson.

Caywood, C. (1997). The handbook of strategic public relations and integrated communications. McGraw-Hill: Boston

Dubois, L. (2010). How to write a social media press release. Retrieved January 30, 2011, from http://www.inc.com/guides/2010/11/how-to-write-a-social-media-press-release.html

Elliott, J. (2010). Advertising vs. PR. Retrieved January 28, 2011, from http://www.tvaproductions.com/article/advertising-vs-pr—17.php

Fredrix, E. (2010). Toyota: No apologies for safety problems in latest ad campaign. Retrieved January 31, 2011, from http://www.huffingtonpost.com/2010/03/07/toyota-no-apologies-for-s_n_489229.html

Guadagni, D. (2009). Social media: 5 strategies for interactive communications. Retrieved January 28, 2011, from http://innerarchitect.com/2009/06/22/social-media-5-strategies-for-interactive-communications/

Mathlesen, S. (2010). Advertising vs. public relations. Retrieved January 30, 2011, from http://www.suite101.com/content/advertising-vs-public-relations-a187370

Shauib, Y. (2011). Publics and target audiences. Retrieved January 28, 2011, from http://yashuaib.tripod.com/id12.html

Turney, M. (2001). Public relations and marketing were initially distinct. Retrieved, January 25, 2011, from http://www.nku.edu/~turney/prclass/readings/mkting.html

Weinreich, N. (2011). What is social marketing? Retrieved January 28, 2011, from http://www.social-marketing.com/Whatis.html

Watch Your Language

30 Thursday Dec 2010

Posted by Gregory Dean in Marketing Philosophy, Marketing Strategy

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advertising media, Communication, Consumer Behavior, Culture, Greg Dean, Gregory Dean, Language, Marketing, Marketing Communication, Marketing Strategy, Marketography

Successful marketing communication requires a strong understanding of the language of the intended audience. Never assume that a whimsical or clever catch-phrase or slogan will be understood by everyone. Language is an evolution of culture, and cultures are geographically bound. Therefore, language is a unique representation of culture in a specific time and location. Language is mostly thought of as spoken words with inflection, tone, and pronunciation linked to a country, state, or region. Variations of language within the same culture are separated by a historical timeline. Hath, henceforth, and hither were commonplace in a Shakespearean play. These words would disrupt and confuse a conversation in a modern day culture.

From Old English through Middle English and into Modern English, sometimes referred to as the Queen’s English, cultural changes influenced language. Alterations of dialect, such as pronunciation, were a direct result of the separation of societies into culturally common groups. The wealthy were educated and pronounced every word with accuracy. The lower class societies could not afford books or to properly educate their youth. As a result, a variation of the language was evolved—influenced by culture. While the words were identical, the pronunciations were radically different. History can have an intense effect on language (Ellis-Christensen, 2009).

Over the past 1000 years, England has hosted many cultural changes with accompanying languages. The United States, a young country by comparison, has spawned many variations of its own language. Derived from the Queen’s English, American English has morphed into the many dialects we use today. We have more variations of language spread across many regions within our borders than ever before. The southern states are recognized as a culture with a slower, more deliberate, pronunciation of our modern vocabulary. Extra syllables are sometimes added as well as vowels accented to create the slow southern drawl we have come to associate with southern cultures.

The pronunciation of our American English vocabulary is bound to geographic regions in our country. There are subtle differences in speech between North Carolina, Tennessee, and Virginia. Individuals from this part of the country can identify a person from one of the other southern states. The New England states have a vernacular all its own. New York has New England and Canadian influence in the northern counties. The boroughs of New York City each enjoy a variation of the New York recognizable accent.

New York, like many other diverse densely populated regions in our country, has their own language. Once again, culture influences the evolution of these languages. A stoop is the Brooklyn word for the front stairs of a building. Dogs are attracted to and a fireman would attempt connecting a fire hose to a Johnny pump. Most of New York City uses the plural of you—yooze.

The United States has managed to incubate language more granular than that of a single culture. From cultures, through societies, and down to individual neighborhoods—language is altered and molded to be unique. Words are pronounced differently and new words are formed as a way to express independence from other cultures. Society affects language. Social boundaries are blurred as schools host multilingual classrooms (Budach & Rampton, 2008). Students from many cultural and ethnic backgrounds find common ground by developing a language unique to their social environment. A variation of language is created by the melting pot of several cultures proving once again that our cultural background forges our language.

Every country has a rich history of language and culture. As long as cultures change and societies are born, language will be as unique and versatile. While the base language for each country can be linked to a culture, societies and even neighborhoods can be responsible for the many variations of a single language. Words, expressions, and non-verbal communication are all part of the language with which we communicate. Our cultural background affects our gestures and reactions as much as our dialect and inflection. Communication is defined as, “Any process in which people share information, ideas, and feelings” (Hybels & Weaver III, 2007). Not only is language influenced by culture, but communication in general. Marketing communication should be indigenous. For your next marketing campaign–watch your language!

References

Budach, G. & Rampton, B. (2008). Language in late modernity: Interaction in an urban school. Language in Society, 37(4). p. 600. Retrieved April 4, 2009, from ProQuest Direct database.

Hybels, S. & Weaver, R. (2007). Communicating Effectively. Boston, MA: McGraw Hill Companies, Inc.

Leila, M. E. & Goodman, J. E. (2008). A Cultural Approach to Interpersonal Communication. Language in Society, 37(4). p. 619. Retrieved April 4, 2009, from ProQuest Direct database.

A Mediated Culture

23 Tuesday Nov 2010

Posted by Gregory Dean in Marketing Philosophy

≈ 11 Comments

Tags

advertising, advertising media, class-dominant theory, conflict perspective, culturalist theory, functionalist, Gregory Dean, Marketing, Marketing Strategy, Marketography, Mass media, Role of Mass Media, sociological perspectives

Mass media has a direct affect on modern culture. This is especially true in the United States where the majority of mass media originates. The moods and attitudes of our society are influenced by messages delivered through mass media channels. Mass media and advertising affect our actions, thoughts, and values. We are at the point where mass media creates and reflects our culture–a mediated culture.

Society controls mass media and vice-versa

A look back through the history of our society will reveal that we were not always influenced by mass media. This is due largely to the fact that our current level of media saturation has not always existed. Television, the most popular mass media medium, was less predominant in the 1960s and 1970s. Even if you were one of the fortunate families to own a television set, only three main channels existed. Additionally, a few public broadcasting and independent stations were in operation. Radio and television shows in the 1960s were targeted to an audience with very high moral values. The audience demographic consisted primarily of two-parent, middle-class families. The programming was a reflection of everyday life. Families living three decades ago would never have tolerated a reality show. Television shows such as, “Leave it to Beaver” was a representation of actual middle-class life in the early 1960s. The same families gathering in front of a television set to watch a 1960s situation comedy would have never accepted the programming of today. Our moral values in the early days of television dictated content and influenced advertising. We controlled mass media by our level of acceptance.

Still photography, motion pictures, telegraphy, radio, telephone, and television were all invented between the years 1860 and 1930. Mass media emerged into a capitalization of the leisure industries to eventually become the dominator of mental life in modern society. Adolf Hitler used radio for propaganda sparking concern that mass media could be used for mind control. Early studies of mass media by sociologists proved that media effects were direct and powerful. However, the level of influence on an individual depended on certain factors such as class and emotional state.

C. Wright Mills defines mass media as having two important sociological characteristics: first, very few people can communicate to a great number; and, second, the audience has no effective way of answering back (The Power Elite, 1956). The introduction of the internet into mainstream mass media has changed communication into a bidirectional process. Responding to email advertisements and answering messages in a chat room change Mills’ definition of mass media. The internet reaches a broad audience but has less of an impact on shaping society.

The majority of research in the 1960s was concentrated on television. Television was believed to be the most pervasive medium. The Mass Communication Theory provides research on the cultural quality of media output. D. McQuail identifies cross-media ownership, and the increasing commercialization of programming by a few select large corporations as a pattern of control. The conflict perspective aligns with this theory.

Media output is controlled and regulated by government. History has shown restrictions ranging from complete censorship to a lighter advisory regulation.

Everyone agrees that mass media is a permanent part of modern culture. The extent of the influence mass media has on our society is the cause of much debate. Both legislature and media executives combine efforts and produce reports showing that mass media is not responsible for shaping society. Sociologists and educators debate these findings and provide a more grounded, less financially influenced theory. Sociologists have three perspectives on the role of mass media in modern culture. The first, limited-effects theory, is based on the premise that people will choose what to watch based on their current beliefs. According to a study by Paul Lazarsfeld, media lacked the ability to influence or change the beliefs of average people (Escote 2008). Individuals living through the early days of mass media were more trusting of news stories. This is evident in the famous radio broadcast, “War of the Worlds.” A startling one out of six people believed we were being invaded by aliens. While the limited-effects theory, also known as the indirect effects theory, was applicable 40 years ago; society is not as naive today. Competing newscasts give us the opportunity to compare stories and accept only what is common between them. Unless the “War of the Worlds” was carried on every major mass media station, society today would recognize it as fiction. Even then, we would be skeptical until our President addressed the nation.

The class-dominant theory argues that the media is controlled by corporations, and the content–especially news content–is dictated by the individuals who own these corporations. Considering that advertising dollars fund the media, the programming is tailored to the largest marketing segment. We would never see a story that draws negative publicity and emotion to a major advertiser. The class-dominant theory in a newsroom extends beyond corporate control. A journalist with a specific agenda can alter or twist a story to suit their own needs.

The third, of the three main sociological perspectives, is the culturalist theory. As the newest theory, the culturalist theory combines both the class-dominant and limited-effects theory to claim that people draw their own conclusions. Specifically, the culturalist theory states that people interact with media and create their own meanings. Technology allows us to watch what we want and control the entire experience. We can choose to skip certain parts of a horror movie and even mute content on live news casts. People interpret the material based on their own knowledge and experience. The discussion forums in an online classroom is one example of the culturalist theory. Although all the students read the same text and study the same content, each student produces a different view based on experiences outside of the classroom. The result is a widely divergent group of posts and many opposite opinions open for discussion.

The Functionalist Perspective

Functionalists believe that mass media contributes to the benefit of society. Charles Wright (1975) identified several ways in which mass media contributes to creating equilibrium in society. He claims the media coordinate and correlate information that is valuable to the culture. The media are powerful agents of socialization. Through the media, culture is communicated to the masses. Serving society through social control, the media act as stress relievers which keep social conflicts to a minimum.

The functionalists idea of equilibrium is evident in news broadcast as well as late night drama programs. In both instances, all human acts lacking morality are reinforced by showing them as unacceptable and wrong. Crimes, such as murder, robberies, and abuse are shown as deviant behavior. Mass media make our world smaller. People gather in groups to watch, they talk about what they see, and they share the sense that they are watching something special (Schudson 1986).

Functionalists view mass media as an important function in society. Mass media can influence social uniformity on scale broader than every before. The internet reaches more individuals in most social groups more often than television or radio. Mass media has been accused of creating dysfunction. Postman (1989) argued that popular media culture undermines the educational system. Claims have been made that there is a link between television viewing and poor physical health among children.

The Conflict Perspective

Conflict theorists believe that mass media is controlled by corporations with the intent of satisfying their own agendas. News casts and sitcoms are not designed to entertain and inform, but rather to keep our interests long enough to deliver a well paid advertisement. The conflict perspective views mass media as a conduit for social coercion. The controllers of mass media use programming and advertising to influence certain social classes. Trends are introduced through mass media and mimicked by the public lending credence to the theory that coercion, domination, and change in our society is partly due to television, radio, print, and the internet. From the conflict perspective, modern mass media are instruments of social control (Sullivan 2007). While functionalists and interactionists agree that mass media is necessary, followers of the conflict perspective view mass media as a necessary evil. As instruments of social control, mass media plays an important role in shaping our society.

The Interactionist Perspective

From the interactionist perspective, mass media is used to define and shape our definitions of a given situation. This perception of reality seems to evolve as our everyday values and cultures change. A definition of the average American family from the 1950s and 1960s is drastically different from what we expect today. The mass media portrayal of family life has always been a benchmark to compare our own lives and successes. Mass media serves as our social acceptance gauge by providing symbols representing what is proper and what is unacceptable. The interactionist perspective shares similarities with the functionalist perspective. Both theories agree that mass media symbolizes a perfect society that individuals strive to emulate. Celebrities, athletes and other role models promote clothing, brands, and behavior while sometimes encouraging values and moral guidelines.

Mass media is defined as “the channels of communication in modern societies that can reach large numbers of people, sometimes instantaneously (Sullivan 2007).” Only recently has technology been advanced enough to realize so many methods of communication. Television, radio, and print were the original members of mass media. The internet brought chat-rooms, email, and the idea of social networking to an already media saturated society. Television and radio represent “push” communication. The consumer has little choice over the content streamed through the cable and onto their television. They can choose to change stations or turn off the television. The internet, specifically web sites, can only be delivered to a consumer if they have made a request to “pull” the content. Mass media has completed a paradigm shift from content and programming we chose to accept, to content designed to shape our society. In the 1960s and 1970s, society controlled mass media. Today, mass media has the single largest impact on our culture. Guidelines for behavior, major beliefs, and values are all influenced by mass media. Every sociological theory concludes that mass media affects modern culture–a mediated culture.

References

Escote, Alixander (April 2008). Limited Effects Theory. http://www.socyberty.com/Sociology/Limited-Effects-Theory.112098

CliffsNotes.com (July 2008). The Role and Influence of Mass Media. http://www.cliffsnotes.com/WileyCDA/CliffsReviewTopic/topicArticleId-26957

Sullivan, Thomas J. (2007). Sociology: Concepts and Applications in a Diverse World. Boston: Pearson Education, Inc.

Wright, Charles (1975). Mass Communication: A Sociological Perspective.

Schudson, Michael (1989). The Sociology of News Production. Sage Publications, Ltd.

Leon-Guerrero, Anna (2005). Social Problems: Community, Policy, and Social Action. Pine Forge Press

Mills, Charles Wright (1956). The Power Elite. Oxford Press

Netflix: An Online Business Beyond Genius

10 Wednesday Nov 2010

Posted by Gregory Dean in Internet Marketing

≈ 4 Comments

Tags

e-commerce, Gregory Dean, Leading Edge, Marketing, Marketing Strategy, Marketography, Movie rental, Netflix, online business, Reed Hastings

Most businesses—regardless the core offering—begin as a simple vision. Sometimes, as with the case of Netflix, a frustrating situation exposed a need and at the same time inspired an entrepreneur. A video rental late fee was the trigger that motivated Reed Hastings to develop one of the most successful click-and-mortar businesses to date—Netflix.com (Jayalath & Wood, 2005). Creating a lucrative e-commerce business requires many of the same basic components as a traditional business—including a cohesive business model, compelling marketing plan, and strong implementation strategy.

A perfect storm of advances in technology, adaptation of DVD media over VHS, and an unmet consumer demand is responsible for the successful launch of Hastings’ vision.

Netflix began its journey of trail-blazing business process innovation in 1997. Reed Hastings, along with partners Marc Randolph and Mitch Lowe, decided to disrupt the traditional video rental business by introducing a new twist on the home movie service (Thomas, 2010). A perfect storm of advances in technology, adaptation of DVD media over VHS, and an unmet consumer demand is responsible for the successful launch of Hastings’ vision. Not unlike other innovative start-up companies, Netflix has undergone several strategy shifts. Each change in focus or direction has assured the company remains dominate in the movie rental industry.

Success is never guaranteed, but a strong business strategy and cohesive implementation plan will increase the odds. Hastings began his business by declaring a simple yet effective mission statement, “our appeal and success are built on the most expansive selection of DVDs; an easy way to choose movies; and fast, free delivery (Brill, 2003).” While the original concept remains the same, the business strategy has evolved to satisfy new market opportunities. Notwithstanding slow adoption by the Internet user community, Netflix has become the perfect model from which all eBusinesses could learn.

Finding the Sweet Spot

Translating market opportunity into business opportunity requires a seven-step process. Hastings followed the seven-step framework to create the original company, but also continued to leverage individual steps to re-evaluate the Netflix position in the changing market. There are four key environments to consider when analyzing a market opportunity—customers, company, technology, and competition (Rayport & Jaworski, 2004). If the four key environments were signified by using overlapping circles of a Venn diagram, the market opportunity sweet spot would be represented in the area where all four circles intersect.

The first step of the seven-step process used by Netflix involved the identification of the unmet or underserved customer needs. Hastings, being a customer himself, was able to draw upon personal experience to help establish the opportunity nucleus. This set of unmet or underserved needs stemmed mostly from processes dictated by traditional video rental businesses. The movie rental industry had already established methods surrounding video rental, late return policies, and membership rules. Hastings believed that without competition, these brick-and-mortar movie rental companies would never have a reason to change.

Following the problem recognition step, a company needs to identify the target audience. Part of this process includes grouping customers into segments. Rayport & Jaworski (2004) refer to the most basic form of segmentation as the distinction between must-have and nice-to-have customers (pgs. 86-87). Segmentation for Netflix includes identifying customers using geographic, demographic, and behavioral segmentation approaches. The target audience for Netflix expands beyond the regions and primary market areas that typically define traditional brick-and-mortar businesses. The Netflix target audience is not limited by geography, but rather bound by technology.

The relative advantage to Netflix competitors begins with the use of technology. An Internet-based system allows a user to find movie titles easier than strolling the aisles of a video rental store. The entire supply-chain of the Netflix mail-order fulfillment system is more desirable than issues surrounding weather, store hours, and drop boxes. Netflix began its business with a distinct competitive advantage.

The next few steps—in the case of Netflix—were overlapping. Step four of the seven-step process involved assessing the resources necessary to deliver the benefits. Step five required an in-depth look into the technology required—including the impact of new technologies. The technology available in 1997 was primitive compared to what is available today. Broadband is commonplace, making the online users’ experience many times better than before—also positioning Netflix for the future. After distilling the opportunity into concrete terms, step six of the market opportunity analysis framework, Netflix justified their position in the market and identified the sweet spot of opportunity for their business.

Defining a Business Model

The value proposition, online offering, resource system, and revenue model combine to define the business model. The Netflix market position as described by Susan Verghese (2005) boasts “an easier way to choose movies, fast and free shipping, and no late fees or due dates.” The value proposition is comprised of three components—segment choice, benefit choice, and resource choice. Netflix’ segment choice encompasses all existing competitors’ customers as well as individuals beginning to desire movies-on-demand. The benefit choice revolves entirely around the convenience of making movie selections online. The resource choice is based on a strong distribution network and supply chain that rivals the competition.

The online experience of Netflix is their differentiator in the market. Following the membership model of other movie rental businesses, Netflix expanded the scope of their offering to include several levels of membership. Rounding out the business model, Netflix created an online community where member could contribute by offering and sharing reviews. The online business model developed by Netflix has become a beacon for others to follow (Venuto, 2010).

Creating the User Experience

Rayport & Jaworski (2004) identify seven design elements of a customer interface (pg. 151). Netflix follows best practices across all 7Cs—context, commerce, connection, communication, content, community, and customization. The context of Netflix’ site follows basic rules for ease of use and navigation standards for the web. Netflix.com uses a clean, uncluttered design to present an online movie rental experience second to none. The color scheme and graphic elements remain true to the corporate brand.

Content on the Netflix website consists mostly of movie imagery, descriptions and storylines, and member posted reviews. A non-member is presented with content designed to encourage enrollment, while the member community enjoys a user-specific experience. The movie titles presented to each member are relevant to his or her likes and dislikes—based on individual movie reviews. The content includes static information regarding the Netflix organization, its affiliates, career listings, and social networking links.

Netflix provides a robust community design element to their site. Members are invited to participate in reviews, forums, and blogs. Additionally, the tell-a-friend option creates a viral element useful in word-of-mouse marketing. The community element of Netflix.com falls short of providing functionality that allows member-to-member communication. The user provided movie ratings are real-time, but the written reviews are moderated before posting live to the site.

Every member can manage his or her own personal movie queue. Much like a playlist, the Netflix queue is used to control and manage the titles and order that the movies should be delivered to the member. The site uses this customization element to provide a member-specific experience to the user. Other customization features include the movie suggestion section. Every member receives an interactive list of movie titles that can be added to their playlist. Analyzing the member’s previously watched movies and the associated ratings provide enough information to create a suggested playlist.

Netflix has mastered the challenges associated with integrating their website and other communication channels. For example, each time a movie is returned—an email is delivered to the member. The member is asked to review the movie and offer additional comments if desired. Periodically, the member receives an email asking for information regarding the timing and condition of a DVD once delivered. This information is used to monitor the quality of service of the fulfillment centers.

The Netflix website offers no external links. The connection design element is not used on the Netflix member site. However, in the non-member and public areas within the website, Netflix offers external links to the websites of major publications, well-known critics, and other movie review sites. Netflix banner ads can be found on many popular sites. Each banner ad links to the Netflix main page.

Netflix’ commerce capability is limited only by its business model. The site, framework, and infrastructure can accommodate a full e-commerce shopping cart—but the only transactions are one-time enrollments and subscriptions to the monthly service. A member only revisits the commerce section of the site if a subscription needs to be changed. Transactions are automatic and recurring. Members spend the majority of their time within areas of the Netflix website that offers movie reviews and search capabilities.

The majority of communication from Netflix to their membership community falls within the generalized online framework for marketing communications (Rayport & Jaworski, 2004, pg. 197). Netflix uses several communication strategies for prospecting and acquiring new members. Of the four categories of communication—direct, personalized, mass marketing, and general approaches—Netflix relies mostly on the general approach of banner ads, email, and viral marketing. Members opt-in to receive special notices, offers, and incentives.

Netflix uses banner advertising to direct traffic from sites with a similar audience demographic as their current target market. Several years ago, Netflix made several attempts to create an additional revenue stream by including third-party advertisements in their own DVD mailings. This concept started when Netflix realized an opportunity to promote an upcoming movie by including imagery on the famous Netflix red envelopes (Anderson, 2005).

Company Culture and Considerations

Reed Hastings defined his approach to managing expectations within his organization as “freedom and responsibility” (Conlin, 2007). Netflix allows its managers to structure their own compensation plans, but expects ultra-high performance in return. Netflix operates as a single organization—with only an online presence. The supply chain, however, extends into many market areas. This model allows for low-cost, quick distribution of the movies.

The satellite fulfillment offices also present challenges with human resources. The turnover in the fulfillment centers is high. The culture at the corporate office level is revolutionary. However, the lack of culture at the lower levels presents challenges associated with recruiting, hiring, training, and retaining employees. Netflix’ culture has evolved over the years, but the underlying message remains the consistent—reward the employees that contribute the most.

The culture of Netflix is unique and proprietary, but effective. The company might struggle to service sixteen million members if a rigid traditional culture were adopted. The processes developed and enforced by the Netflix management team are the true strength of the organization. While the recent addition of streaming on-demand movies from a Wii console or PC reduces the demand of physical media, the rapid growth of the member base offers a balance.

Conclusion

Netflix has reported 550 million in revenue for the third quarter of 2010. The Netflix business model is a chameleon to technology. As new technology becomes available, such as faster connection speed, Netflix finds new opportunities. With the adoption of new products and services, Netflix can continue their rapid rate of growth—with no end in sight. Netflix has had a negative impact on several mainstream brick-and-mortar movie rental chains. Additionally, if Netflix’ streaming video service gains momentum, the U.S. Postal Service could feel a decline in service.

Netflix has managed to operate in a space free and clear of regulations. Their competitive advantage revolves around their supply-chain and fulfillment processes. Technology plays an important role in the distribution system of Netflix. Every order is automatically queued to the fulfillment office closest to the delivery address. A cohesive business model, compelling marketing plan, and strong implementation strategy is the only common ties between Netflix and other successful online businesses. Their success comes from technology, vision, and innovation. While difficult situations sometimes inspire genius solutions—Hastings vision to eliminate movie rental late fees has proven to be far beyond genius.

References

Anderson, D. (2005). Netflix stirs up excitement for ‘Geisha Girl.’ BrandWeek. [Electronic version]. Retrieved November 8, 2010, from http://www.brandweek.com/bw/news/recent_display.jsp?vnu_content_id=1001524775

Brill, R. (2003). The Brill report: Netflix. Retrieved November 6, 2010, from http://www.tcf.net/netflix.html

Conlin, M. (2007). Netflix: Flex to the max. Retrieved November 4, 2010, from http://www.businessweek.com/magazine/content/07_39/b4051059.htm

Jayalath, H. & Wood, A. (2005). The outlook for online DVD rental: A strategic analysis of the US and European markets. HighBeam Research. Retrieved November 6, 2010, from http://www.highbeam.com/doc/1G1-182523311.html

Thomas, J. (2010). When was Netflix founded? Retrieved November 8, 2010, from http://www.life123.com/technology/home-electronics/netflix/when-was-netflix-founded.shtml

Rayport, J. & Jaworski, B. (2004). Introduction to e-commerce. Boston: McGraw-Hill

Venuto, D. (2010). A better business model from Netflix. Retrieved November 6, 2010, from http://www.minonline.com/minsiders/Domenic-Venuto/A-Better-Business-Model-From-Netflix_11158.html

Verghese, S. (2005). Can Netflix play David to the Goliaths entering the DVD online rental space? Retrieved November 7, 2010, from http://www.virtualstrategist.net/Issue7/7-1-1.HTM

Understanding Consumer Attitudes

17 Sunday Oct 2010

Posted by Gregory Dean in Marketing Strategy

≈ 28 Comments

Tags

ABC Model of Attitudes, Attitudes, Consumer Behavior, Ego-Defensive Function, Functional Theory, Gregory Dean, Knowledge Function, Marketing Strategy, Multiattribute Model, Standard-Learning Hierarchy, Utilitarian Function, Value-Expressive Function

Consumer attitudes are both an obstacle and an advantage to a marketer. Choosing to discount or ignore consumers’ attitudes of a particular product or service—while developing a marketing strategy—guarantees limited success of a campaign. In contrast, perceptive marketers leverage their understanding of attitudes to predict the behavior of consumers. These savvy marketers know exactly how to distinguish the differences between beliefs, attitudes, and behaviors while leveraging all three in the development of marketing strategies.

An attitude in marketing terms is defined as a general evaluation of a product or service formed over time (Solomon, 2008). An attitude satisfies a personal motive—and at the same time, affects the shopping and buying habits of consumers. Dr. Lars Perner (2010) defines consumer attitude simply as a composite of a consumer’s beliefs, feelings, and behavioral intentions toward some object within the context of marketing. A consumer can hold negative or positive beliefs or feelings toward a product or service. A behavioral intention is defined by the consumer’s belief or feeling with respect to the product or service.

A marketer is challenged to understand the reason a particular attitude might exist.

Perhaps the attitude formed as the result of a positive or negative personal experience. Maybe outside influences of other individuals persuaded the consumer’s opinion of a product or service. Attitudes are relatively enduring (Oskamp & Schultz, 2005, p. 8). Attitudes are a learned predisposition to proceed in favor of or opposed to a given object. In the context of marketing, an attitude is the filter to which every product and service is scrutinized.

The functional theory of attitudes—developed by Daniel Katz—offers an explanation as to the functional motives of attitudes to consumers (Solomon, 2008). Katz theorizes four possible functions of attitudes. Each function attempts to explain the source and purpose a particular attitude might have to the consumer. Understanding the purpose of a consumer’s attitude is an imperative step toward changing an attitude. Unlike Katz’s explanation of attitude—as it relates to social psychology, specifically the ideological or subjective side of man—consumer attitudes exist to satisfy a function (Katz, 1937).

The utilitarian function is one of the most recognized of Katz’s four defined functions. The utilitarian function is based on the ethical theory of utilitarianism, whereas an individual will make decisions based entirely on the producing the greatest amount of happiness as a whole (Sidgwick, 1907). A consumer’s attitude is clearly based on a utility function when the decision revolves around the amount of pain or pleasure in brings.

The value-expressive function is employed when a consumer is basing their attitude regarding a product or service on self-concept or central values. The association or reflection that a product or service has on the consumer is the main concern of an individual embracing the value expressive function (Solomon, 2008). This particular function is used when a consumer accepts a product or service with the intention of affecting their social identity.

The ego-defensive function is apparent when a consumer feels that the use of a product or service might compromise their self-image. Moreover, the ego-defensive attitude is difficult to change. The ego-defensive attitude—in general psychology—is a way for individuals deny their own disconcerting aspects (Narayan, 2010). A marketer must tread lightly when considering a message strategy to a consumer with an attitude based on the ego-defensive function.

The knowledge function is prevalent in individuals who are careful about organizing and providing structure regarding their attitude or opinion of a product or service (Solomon, 2008). A marketer can change a consumer’s knowledge function based attitude by using fact-based comparisons and real-world statistics in the message strategy. Vague and non-relevant marketing campaigns are ineffective against a knowledge attitude audience.

Advertising campaigns that appeal to consumer behaviors based on the value-expressive or utilitarian functions are the most common (Sirgy, 1991). Utilitarian advertisements deliver a message regarding the benefits of using a product or service. Advertising targeted to consumers with value-expressive attitudes will typically include product symbolism and an image strategy. In either case, it is important to understand why a consumer holds a particular attitude toward the product or service.

The ABC Model of Attitudes—consisting of the three components: affect, behavior, and cognition—accentuates the relationship between knowing, feeling, and doing (Solomon, 2008). Affect is the feeling an individual has regarding an object. In the current context, affect represents the emotion or opinion about a product or service. Behavior is the responses of a consumer resulting from affect and cognition. Behavior only implies intention. Cognition is an individual’s belief or knowledge about an attitude object.

The hierarchy of effects is the result of all three components working together. The hierarchy of effects is a concept used to distinguish between the involvement levels or motivation an individual might have toward the attitude object. The standard-learning hierarchy, low-involvement hierarchy, and experiential hierarchy are the three hierarchies of effects. Dr. Jill Novack, from Texas A&M University, includes a fourth member of the hierarchy of effects. Novack states that behavioral influence should be included, and represented by the component order—behavior, belief, and affect (Novack, 2010).

The standard-learning hierarchy, also known as the high-involvement hierarchy assumes that the consumer will conduct extensive research and establish beliefs about the attitude object. The consumer will then establish feelings regarding the attitude object. The feelings—or affect—are followed by the individual’s behavior. The cognition-affect-behavior approach is prevalent in purchase decisions where a high level of involvement is necessary.

The low-involvement hierarchy consists of a cognition-behavior-affect order of events. A consumer with an attitude formed via the low-involvement hierarchy of effects bases the purchase decision on what they know as opposed to what they feel. The consumer establishes feeling about a product or service after the purchase. This limited knowledge approach is not suitable for life-changing purchases such as a car or new home.

The experiential hierarchy of effects is defined by an affect-behavior-cognition processing order. In this scenario, the consumer is influenced to purchase based entirely on their feeling regarding a particular product or service. Cognition comes after the purchase and enforces the initial affect. Emotional contagion is common in attitudes formed by the experiential hierarchy of effects (Solomon, 2008). Emotional contagion, in this situation, suggests that the consumer is influenced by the emotion contained in the advertisement.

The elaboration likelihood model (ELM) offers a theory concerning attitude change. Similar to the ABC model of hierarchy, the ELM model is based on the level of involvement in the purchase (Petty & Cacioppo, 1981). Depending on the level of involvement and motivation, the consumer will follow one of two possible routes. The central route is when the consumer is highly involved in every aspect of the purchase. A consumer following the central route extends extra effort in researching and understanding the products or services. The peripheral route—as the name implies—is followed by a consumer with low involvement in the purchase process.

Social judgment theory offers another explanation for attitude changes, whereas a consumer compares current information to previous notions (Novack, 2010). Incoming messages are filtered down two possible paths—latitudes of acceptance and latitudes of rejection. If the new information is similar to existing information, the consumer follows the latitude of acceptance. In contrast, if the information is disparate, the consumer follows the latitude of rejection (Solomon, 2008).

Multiattribute models are used to understand and measure attitudes. The basic multiattribute model has three elements—attributes, beliefs, and weights. Attributes are the characteristics of the attitude object. Beliefs are a measurement of a particular attribute. Weights are the indications of importance or priority of a particular attribute. A multiattribute model can be used to measure a consumer’s overall attitude.

The most influential multiattribute model—the Fishbein model—also uses three components of attitude. The first, salient beliefs, is a reference to the beliefs a person might gain during the evaluation of a product or service. Second, object-attribute linkages, is an indicator of the probability of importance for a particular attribute associated with an attitude object. Evaluation, the third component, is a measurement of importance for the attribute. The goal of the Fishbein model is to reduce overall attitudes into a score. Past and predicted consumer behavior can be used to enhance the Fishbein model (Smith, Terry, Manstead, & Louis, 2008).

A more advanced and automated modeling technique, semantic clustering, is used to analyze and predict consumer attitudes. While proven effective for measuring the flow and direction of information, recently semantic clustering is being used to elicit attitudes toward brands (Shaughnessy, 2010). Blogs and forums are a prime target for an analyst using the semantic clustering technique.

Results from a multiattribute will reveal several pieces of information that can be used in various marketing applications. If the competitor scores higher on a particular attribute, a marketer should downplay the attribute and emphasize the importance of a high-scoring attribute of his or her own. Likewise, if the score reveals a broken connection between a product and attribute, the marketer can develop a message strategy to establish the link. Differentiation is an important advantage to marketers. Using the results of a multiattribute model, a marketer can develop and market new attributes to existing products.

Changing a consumer’s attitude towards a product, service or brand is a marketer’s Holy Grail. Three attitude change strategies include: changing affect, changing behavior, and changing beliefs (Perner, 2010). Classical conditioning is a technique used to change affect. In this situation, a marketer will sometimes pair or associate their product with a liked stimulus. The positive association creates an opportunity to change affect without necessarily altering the consumer’s beliefs. Altering the price or positioning of a product typically accomplishes changing behavior. One example is the use of coupons or incentives to promote sales.

Changing beliefs is the most difficult of the three. A marketer can leverage several approaches to changing a consumer’s beliefs about a product. Four common approaches include: change current held beliefs, change the importance of beliefs, add beliefs, and change ideal. Changing beliefs is sometimes a necessary, for example, when a mature product is to be reintroduced into the market (Arora, 2007).

Marketing spans many disciplines including mathematics, and psychology. Math plays an important role is predicting consumer behavior. Understanding the reasons behind consumer behavior requires knowledge of several theories of psychology. These two disciplines combine to aid in the complete rationalization of consumer behavior. Attitudes are easily formed, but difficult to change. Marketing is an ongoing attempt to instill a positive attitude toward a specific product or service.

Attitudes can be influenced by many factors outside the product attributes. Social and cultural environment as well as demographic, psychographic, and geographic conditions can sometimes shape consumer behavior. Consumer attitude, if positive, is an advantage to a marketer. A savvy marketer can build a model for prospecting new consumers from the attributes of a satisfied customer. Direct marketing companies create higher response rates by using look-alike modeling based on existing customers—individuals with a positive attitude.

Consumer behavior is the study of how a consumer thinks, feels, and selects between competing products. Moreover, the study of attitudes is critical to understanding the motivation and decision strategies employed by consumers. The combination of beliefs, attitudes, and behaviors influence how a consumer reacts to a product or service. Marketers develop relative, compelling marketing messages using the same combination of information, and ultimately influence consumer behavior.

References

Arora, R. (2007). Message framing strategies for new and mature products. The Journal of Product and Brand Management, 16(6), 377. Retrieved October 4, 2010, from ABI/INFORM Global. (Document ID: 1373518421).

Katz, D. (1937). Attitude measurement as a method in social psychology. [Electronic version]. Social Forces, 15(4), 479-482. Retrieved October 3, 2010, from JSTOR: http://www.jstor.org/stable/2571413

Narayan, S. (2010). The perils of faking it. Retrieved October 3, 2010, from http://64.74.118.102/2010/02/04214927/The-perils-of-faking-it.html

Novack, J. (2010). Internal influences – lifestyle and attitude. Retrieved, October 3, 2010, from http://www.marketingteacher.com/lesson-store/lesson-internal-influences-lifestyle-attitude.html

Oskamp, S. & Schultz, W. (2005). Attitudes and opinions. Lawrence Erlbaum Associates, NJ.

Perner, L. (2010). Consumer behavior: the psychology of marketing. Retrieved October 2, 2010, from http://www.consumerpsychologist.com/

Petty, R. & Cacioppo, J. (1981). Attitudes and persuasion: classic and contemporary approaches. Dubuque, IA: William C. Brown.

Shaughnessy, H. (2010). How semantic clustering helps analyze consumer attitudes. Retrieved, October 4, 2010, from http://blogs.hbr.org/research/2010/07/every-day-in-the-english.html

Sidgwick, H. (1907). Methods of ethics (7^th ed.). Macmillan and Company, London.

Sirgy, J. (1991). Value-expressive versus utilitarian advertising appeals: when and why to use each appeal. Retrieved October 2, 2010, from http://www.allbusiness.com/professional-scientific/advertising-related-services/270171-1.html

Smith, J., Terry, D., Manstead, A., Louis, W., Kotterman, D., & Wolfs, J. (2008). The Attitude-Behavior Relationship in Consumer Conduct: The Role of Norms, Past Behavior, and Self-Identity. The Journal of Social Psychology, 148(3), 311-33. Retrieved October 4, 2010, from ABI/INFORM Global. (Document ID: 1501929231).

Solomon, M. (2008). Consumer behavior buying, having, and being (8th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

iPod or Zune: Which side of the marketing fence are you on?

19 Sunday Sep 2010

Posted by Gregory Dean in Marketing Strategy

≈ 1 Comment

Tags

Apple iPod, Consumer Behavior, Gregory Dean, Marketing, Marketing Research, Marketing Strategy, Marketography, Microsoft Zune, MP3 Player, self-image congruence, utilitarian

The battle for digital media player dominance has raged on for many years. Two companies show their prowess as they compete for similar markets. Only one company can be the market leader. And yet, both companies—Apple and Microsoft—have developed a cult-like following. Competitor brand loyalty is a difficult obstacle to overcome. Apple and Microsoft use two different marketing strategies to attract a similar audience.

As with any new technology, the first generation will quickly test the market for price and feature acceptance. The Apple iPod, introduced in 2001, was targeted to the older college crowd and young professionals. The first Apple iPod commercial was developed around the message strategy of style and portability. While the first generation iPod was several times larger and thicker than the stylish designs of today, they were much smaller than their predecessor—Sony’s Walkman and Discman.

The Sony Walkman, introduced in 1979, weighed 14 ounces and priced just under $500 (McCracken, 2009). The Sony Discman weighed slightly less, but had a tendency to skip. Apple’s first generation iPod boasted a storage capacity of one thousand songs, weighed less than half of the Sony Discman, and did not skip while playing your favorite songs.

Five years after the inception of the Apple iPod, Microsoft introduced their version of a portable digital music player—the Zune. In November 2006, the Microsoft Zune was hyped as an alternative to the iPod. The audience targeted by Microsoft in their first wave of advertising overlapped the demographic beleaguered by Apple. While the target audience was the same, the approach by each company was quite different. Apple used a live actor in a real-life situation to showcase the ability to transfer music from their computer to the iPod. Microsoft, however, was not introducing a new technology during the launch of the Zune. Their approach used graphics and animation to show different music genres all the while techno background music provided a pulse.

It is apparent that Apple’s task was more difficult as they concentrated their message strategy on sparking motivation within the market. At first glance, it seemed that the Apple iPod was positioned to satisfy a hybrid utilitarian-hedonic need. It is certainly better to take your music wherever you go rather than only having access to your favorite tunes on your computer, therefore resolving a utilitarian need. On the other hand, the excitement associated with adopting new technology satisfies a hedonic need (Solomon, 2009).

Microsoft had the advantage of monitoring the results from Apple’s early marketing efforts before entering the market. Catering to a digital media player savvy audience, Microsoft positioned the Zune as an independent device—not tethered to Apple iTunes for content—and compatible with the Microsoft operating systems. Having the largest market share of computer operating systems, Microsoft assumed a natural following. So much, in fact, that they failed to re-enforce the idea of solving music portability issues.

By the time that Microsoft zoomed in on their target audience, Apple had saturated the market. The Apple iPod quickly became the music player of choice for children between the ages 6 and 12 (Bulik, 2008). The addition of video capabilities in the later generation iPods created new market opportunities for Apple. Corporations are leveraging iPods for employee training. BCC News first reported the use of iPods for workplace training in 2006 (http://news.bbc.co.uk/2/hi/business/4859302.stm).

Both, the iPod and Zune, have enjoyed many years of success. Each device has evolved and embraced new technology as it becomes available. These devices have more storage, quicker retrieval, better screen resolution, and longer battery life. The latest version of each device boasts a touch screen. While the functionality of the iPod and Zune are comparable, Apple and Microsoft currently each concentrates their marketing efforts on different segments of the population. For Apple, the focus has shifted more towards the aesthetics of their device in anticipation of a self-image congruence purchasing decision (Solomon, 2009).

Microsoft is targeting a niche audience with the Zune poised for gaming, and at the same time creating a cult product. The Zune’s narrow-focus marketing strategy places it higher on Maslow’s Hierarchy of Needs. Gaming is a hobby, and in many cases a lifestyle. The Microsoft Zune satisfies the upper-level need of self-actualization (Solomon, 2009). Apple and Microsoft dominate the market with their innovative products and services. Their digital music players originally competed for consumers in the same market. However, each company has migrated toward their respective strengths resulting in a respectable following.

References

BBC News (2006). Hospitals train staff with iPods. Retrieved September 13, 2010, from http://news.bbc.co.uk/2/hi/business/4859302.stm

Bulik, B. (2008). Little ears are big bucks for music players. [Electronic version] Advertising Age. Retrieved September 13, 2010, from http://adage.com/article?article_id=123205

McCracken, H. (2009). The original Walkman vs. the iPod Touch. Retrieved September 13, 2010, from http://technologizer.com/2009/06/29/walkman-vs-ipod-touch/

Solomon, M. (2009). Consumer behavior buying, having, and being (8th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

De-commoditize and Return to Profitability

20 Friday Aug 2010

Posted by Gregory Dean in Marketing Strategy

≈ 3 Comments

Tags

business, commoditize, commodity, de-commoditize, Greg Dean, Gregory Dean, Marketing, Marketing Strategy, profit, profitability

Your company has long been positioned as a leader in your industry. The entrepreneurial and competitive spirit cascading through the organization inspires innovation. Without innovation, your company will find itself blending into the background with hundreds of other companies in the same market. Returning to profitability does not mean living in the past, but rather positioning for the future—without losing sight of how you got here.

From your early and humble beginnings, you realized that your products and services were becoming a ‘commodity.’ The moment when the majority of companies within a given industry can provide the same products or produce the same services—it becomes a ‘commodity.’ By leveraging existing or developing new technologies to make your products and services different from the competition, you ‘de-commoditize’ your business. In contrast, offering the services that make your company unique to other companies to add to their marketing mix ‘commoditizes’ your own services.

De-commoditization is a never-ending, full-time job. Most likely, technology has played an important role in your success. However, technology is also responsible for spring-boarding small companies onto your playing field—competing for your customers. Companies that leverage off-the-shelf solutions share the same capabilities, have identical advantages, and compete for business based entirely on price. Your company must establish a differentiator and separate from the pack to once again take the lead.

The window of opportunity for enjoying the exclusiveness of a new product or service is narrow. It is simply a matter of time before your closest competitors mirror your efforts. In many cases, your competition finds a way to offer the same services at a lower cost—making your services a ‘commodity’, and being in a better position to compete. You can combat this problem by making constant enhancements to your products and services—making it difficult for your competition to keep up.

Be aggressive and take charge of your organization. Do not become a spectator in your industry!

An Ounce of Prevention Saves a Gallon of Gasoline

13 Tuesday Jul 2010

Posted by Gregory Dean in Marketing Strategy

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Automakers, Automobile Industry, Automobile Manufacturers, Dean, Greg Dean, Gregory Dean, Marketing Strategy, Marketography, Save Gasoline

Lightning does not strike twice, but thrice in the automobile industry. Over the past four decades, the automobile industry has been faced on three different occasions with consumer demand misaligned from automaker’s supply. Lessons from the first incident, in 1973, should have thwarted similar fallout from future situations. A short attention span, narrow focused direction, and greed are all responsible for the automobile industry’s inability to proactively produce automobiles that address the concerns of today’s consumer.

Making Decisions Without an Ear to the Ground

For whatever reason, the automotive industry seems to have a history of making decisions in a vacuum. The general public is sensitive to the aggressive increases in fuel prices, and yet the manufacturers produce automobiles with very low MPG ratings. The motive in the past, according to Paul MacDuffie in his 2008 Knowledge@Wharton article, was the irresistible profit margins on light trucks. Does greed continue to be the driving force behind the automobile industry’s selective hearing? One of the biggest mistakes any industry can make is to not listen to the consumer. With a deaf ear, the automobile industry repeated their mistakes again in the 1980s.

To combat the fuel shortage in the 1970s, auto manufacturers shifted to unleaded fuel, catalytic converters, and a recalculation of horsepower ratings (De Lorenzo, 2008). Of course, this did nothing for the actual rising costs of fuel. It did, however, mask certain sensitive issues such as MPG rating. As a result, consumers continued to purchase gas-guzzling automobiles. In the 1980s, automobile manufacturers perceived the fuel shortage as a temporary problem. They predicted that an aggressive drop in fuel prices would follow the shortage—and it did.

In 2005, Fox News reported that the latest fuel shortage would finally force the automobile industry to start developing fuel-efficient vehicles (2005). After surviving the affects of two previous shortages, the automobile industry felt confident that this too would pass. When the prices exceeded everyone’s predictions, analysts began to make predictions regarding the consumer’s tolerance. Automobile manufacturers were banking on the fact that Americans would probably pay nearly six dollars per gallon before giving up their sport utility vehicles. Fuel prices in Europe are nearly twice as much as in the United States.

The automakers gambled on the fact that the consumers would bounce back from the impact of high fuel costs and continue to purchase SUVs. One big mistake was to incubate the impression that the automobile industry is more interested in a profit than the economic welfare of the public. The lack of marketing research—an ear to the ground—during these times of crisis would have helped the automobile manufacturers develop products to combat the fuel shortages.

With the most recent fuel shortage, the automobile industry faced preemptive criticism. The consumers seemed to take the proactive role and demand better fuel economy. Avoiding a black eye, the automakers introduced several new hybrid and fuel cell model vehicles. The market conditions have changed. The industry is driven by the wants, needs, and concerns of the consumers as opposed to the arrogance of the industry. Pressure from several fronts has forced automakers to shift their focus.

As with any plan to change corporate direction, a formal strategy is necessary (Cateora & Graham, 2007). Automobile manufacturers can ensure success by conducting marketing research to determine the best array of products for the current consumer. Post-sales surveys are important to help fine tune the marketing mix. The most important tactic the automobile industry could add to their latest strategy is to become more sensitive to the concerns of society. Be a partner to the consumer and a friend to the environment.

The automobile is not entirely at fault. Without a demand for the gas-guzzling SUVs, automobile manufacturers would have no reason to produce them. The automobile industry could claim that they were simply satisfying the demands of the consumer, and it is the consumer that is thumbing their noses at rising fuel costs. While this may be true, it is the automobile industry that has thumbed its nose at the environment by not driving efforts and steering the public into environmentally friendly automobiles—until now.

The automobile industry is no longer behind the curve. Manufacturers are tuned into the pulse of the consumer. This is not the result of learning from their mistakes, or even proactively anticipating the financial burden of rising fuel costs. The automobile manufacturers realized that the consumers are demanding less dependency on fossil fuels. Moreover, automobile manufacturers have grown a conscience regarding the impact of internal combustion engines to our environment. And while an ounce of prevention can save a gallon of gasoline, an ounce of forward thinking can save a planet.

References

Cateora, P. & Graham, J. (2007). International marketing. New York: McGraw-Hill Irwin.

De Lorenzo, P. (2008). Rants #427 – Autoextremist ~ the bare-knuckled, unvarnished, high-octane truth. Retrieved July 12, 2010 from http://www.autoextremist.com/current/2008/1/13/rants-427.html

FoxNews.com (2005). High gas prices changing auto market. Retrieved July 12, 2010, from http://www.foxnews.com/story/0,2933,170297,00.html

Knowledge@Wharton (2008) Behind the curve: Have U.S. automakers built the wrong cars at the wrong time—again? Retrieved July 12, 2010, from http://knowledge.wharton.upenn.edu/articles.cfm?articleid=2012

Pure Water Fuels Pure Marketing

28 Monday Jun 2010

Posted by Gregory Dean in Marketing Strategy

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Aquafina, Bottled Water, Branding, Coca-Cola, Dasani, Fiji Natural Artesian Water, Fiji Water, Gregory Dean, Marketing, Marketing Strategy, Nestle, Pepsi, Zephyrhills

Very few products of nature can be processed and packaged into a form more appealing than the packaging provided by Mother Nature herself. The marketing strategy of Fiji Natural Artesian Water has proven the effectiveness of carrying forward the environment, beauty, and overall surroundings associated with their product—water. Fiji Water leverages every advantage of having a clean and pure product—including the source and environment where it originates—to maintain a branding strategy second to none.

The bottled water industry generates roughly 11 billion dollars in revenue each year (Alsever, 2009). Companies conventionally versed in the production of soft drinks continue to test the waters hoping to cash in on a health conscience society. Dasani by Coca-Cola and Aquafina by Pepsi own an impressive share of the market. However, Nestle Waters is the industry giant with their many domestic brands dominating grocer’s shelves across the country. Nearly half of the 8.7 billion gallons of bottled water consumed by Americans in 2008 was produced using a purification process (Fishman, 2007). Most of the Nestle Waters brands, such as Zephyrhills, are produced from spring water. Fiji Natural Artesian Water is the only bottled water from an artesian source.

Fiji Water created a pure marketing strategy atop one of the purest products in the industry. The foundation for their three product level approach is the core benefits associated with their bottle water. Fiji Water is simply a pure tangible good as there are no accompanying services. Every consumer of this artesian water not only gets a superior product, but an experience as well. The consumer is buying an experience with the added benefit of great tasting, pure and clean water.

Second only to oxygen, water is very important to good health and well-being. Simply put—we need water to sustain life. Not just any water, but clean healthy water. The Fiji Water consumer is really buying—in addition to pure clean water—a healthy lifestyle enveloped by the idea of tranquility and beauty associated with a pristine tropical rainforest. Nature provides credibility to Fiji Natural Artesian Water.

Following the three levels of product, Fiji Water transitioned the core benefits into an actual product by identifying brand name, features, packaging, and quality level (Kotler & Armstrong, 2008). Fiji Water created their brand by riding the coattails of brand equity already established by the Fiji name. Fiji Water benefits from the namesake associated with the pristine, pure, unindustrialized tropical rainforests of the Fiji Islands. With the name Fiji comes certain connotations responsible for the perception of their product. Fiji suggests a specific environment in much the same way a connotation suggests a rose signifies passion.

Fiji Water recognized the need to differentiate its product from others in the market, and created a distinct packaging strategy. If a consumer could first taste the water drawn from ancient artesian wells there would be little need be concerned with packaging. The majority of bottled water populating the store shelves is packaged in clear plastic containers. The content while diversely different looks exactly the same. The packaging influences the consumer. Moreover, the packaging narrates the contents by offering visual suggestions of the water’s origination.

Many bottled water brands, especially those produced from springs, include a label with images depicting a serene picturesque water source. None represent the contents better than Fiji Water. Starting with the basic shape of the packaging, Fiji distinguishes itself from others. The square bottle is easily recognized and positively associated with the product—Fiji Natural Artesian Water. The full experience associated with consuming water from an artesian aquifer at the very edge of a rainforest starts with a sophisticated label. Instead of a simple tag, Fiji Water draws the consumer into an environment of palm leaves and Hibiscus blooms. The multi-dimensional labeling technique entices the consumer to purchase and consume the contents.

Introducing line extensions, brand extensions, multibrands, and new brands are techniques associated with brand development (Kotler & Armstrong, 2007). Introducing an extension to the same line could dilute the current product offerings. For example, adding an antioxidant ingredient would create opportunities in similar markets, but at the risk of losing credibility with the current product. The consumers might begin to question the natural benefits of Fiji Water if other ingredients need to be added. Introducing a brand extension such as coconut milk would benefit from the brand name recognition and allow Fiji Water to expand into other markets. The Fiji brand has been developed to include a certain brand experience. It would not be a good branding strategy for Fiji Water to dip their toes into other areas outside their core competency. Any brand development strategy that uses the current brand name will be successful.

Fiji Water uses geography to their advantage. While the cost of distribution is far greater than competing products produced in the United States, distance is used in Fiji’s mainstream marketing. Directly from a rainforest hundreds of miles from the nearest continent—Fiji Water is the natural choice for a health conscience society. A cohesive brand development strategy compliments a pure marketing campaign promoting the purist of water—Fiji Natural Artisan Water.

References

Alsever, J. (2009). Bottled Water Sales Slow Amid Backlash. Retrieved December 20, 2009 from, http://www.msnbc.msn.com/id/34451973/ns/business-going_green/

Fishman, C. (2007). Message in a Bottle – Bottled Water – Luxury Water – Mineral Water. Retrieved December 20, 2009 from, http://www.fastcompany.com/magazine/117/features-message-in-a-bottle.html?page=0%2C0

Kotler, P. & Armstrong, G. (2008). Principals of Marketing. Pearson Prentice Hall. Upper Saddle River, New Jersey.

Dominos Pizza – Beyond the Dough

09 Tuesday Mar 2010

Posted by Gregory Dean in Marketing Strategy

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Dominos Pizza, Dough, HeatWave, Leading Edge, Marketing Strategy, Noid, Pizza, SWOT

Much like the soft elastic dough used as the foundation for which their mainstay product is built, Domino’s Pizza has shaped their marketing strategy into a juggernaut that has enjoyed nearly half a century of success. Currently a market follower—second only to Pizza Hut—Domino’s longevity and rapid rate of growth is due largely to their ability to establish, maintain, and remain true to their original marketing mix. Domino’s success, however, is due to the fact that they have been able to differentiate themselves on a very crowded playing field.

Most companies, at least the successful ones, concentrate on the four Ps that compose their marketing mix. Albeit product, price, place, and promotion are the cornerstone of many marketing strategies—Domino’s Pizza has leveraged the four Cs, or consumer’s viewpoint, to establish their marketing mix. Customer solution, cost, convenience, and communication are considered each time Domino’s Pizza introduces a new product or initiates a new promotion.

The science of marketing was the last thing on the minds of the Monaghan brothers when they borrowed $500 to purchase Dominick’s Pizza in 1960. With a down payment of $75, Tom and Jim Monaghan took ownership of a small pizza shop in Ypsilanti, Michigan. Their sights were firmly set on building a dynasty of three locations and monopolizing pizza delivery in a small concentrated area. From inception, the Domino’s logo contained three dots. These dots, still present on the current logo, represent Tom Monaghan’s original vision of opening three locations and develop a triangulation delivery strategy (Miranda, 2009).

In the early years of business, pizza was the only item on the menu at Domino’s. Side items were never considered to be a part of the menu. Remaining sensitive to competitors and allowing competition to affect product pricing is a classic trait of a market follower (Kotler & Anderson, 2008). Domino’s was eventually forced to add medium and extra large sizes to remain competitive.

Domino’s Pizza has chosen a market follower strategy. Product, one of the four Ps of the marketing mix, is an area where the market leader continues to influence Domino’s. Competition forces changes to the market followers. The first change to the product offering at Domino’s happened almost three decades after they opened. In 1989, Domino’s Pizza introduced a deep-dish pizza (Laukens, 2010). While it would stand to reason that the new addition to the menu was an answer to a competing product, Domino’s had entered a market where deep-dish was the only acceptable version of a pizza.

Market research had revealed that Domino’s market demographic was culturally diverse. Domino’s responded by adding several other variations of the basic pizza. Hand tossed and thin crust pizzas were added to the menu to satisfy demand in specific market areas and remain competitive. Domino’s keeps a watchful eye on the consumer reaction to specific product and pricing. The ability to see their company from the buyer’s viewpoint is a significant advantage for any company.

Domino’s Pizza listens to feedback from the consumers, and at the same time occasionally glances over the shoulder of their competition for inspiration and influence. From the customers’ feedback and buying habits, Domino’s is able to glean information to help influence direction. Domino’s strengths, weaknesses, opportunities, and threats have changed many times over. The entire pizza industry has evolved into a highly competitive array of corporate giants. And yet, it remains important to perform a SWOT analysis as often as possible.

Domino’s strengths include their ability to remain unscathed, although influenced, by their competition. Moreover, their visionary approach to creating a better consumer experience by developing better manufacturing methods is at the foreground. Hard work, persistence, and thinking outside the pizza box have been Domino’s formula for success. Although not the market leader, Domino’s Pizza is recognized as the leader of innovation. The pizza industry is crowded with businesses trying to outdo one another with a product that is not well received if strayed too far from the original. Domino’s decided to create a value proposition beyond the product. Tom Monaghan’s goal of perfecting the pizza delivery was tested when Domino’s once again raised the bar. In 1986, Domino’s Pizza created a slogan and spawned an aggressive advertising campaign in an attempt to differentiate themselves from other pizza businesses.

Taking advantage of an impatient consumer base, Domino’s touted, “you get fresh, hot pizza delivered to your door in 30 minutes or less—or it’s free.” Competition scrambled to find an answer, but without the automation invented and deployed by Domino’s it would be impossible. Domino’s was the first to use a production assembly line method for producing pizzas. A belt-driven pizza oven produced a continuous stream of pizzas allowing the manufacturing and delivery process to become manageable, and for the most part—predictable.

Domino’s rode the wave of success for many years. Convenience for the consumer was a definite advantage. During this time, Domino’s Pizza opened several thousand new franchises and was taking over the market. Then as quickly as the innovative wildfire had spread, it was extinguished. The market momentum was quickly lost when a woman in St. Louis was involved an automobile accident with a Domino’s Pizza delivery driver. News turned into bad publicity and in 1993 the 30-minute guarantee was discontinued.

Domino’s strength, the ‘S’ in a SWOT analysis, was their ability to produce and deliver a product faster and more efficiently than their competition. Not promoting the 30-minute guarantee created a level playing field allowing the focus to shift toward product and price. However, Domino’s had continued the use of their belt-driven pizza production oven and therefore better positioned to compete in the pizza price wars.

Domino’s Pizza exposed several weaknesses, the ‘W’ in a SWOT analysis, in their approach to advertising and marketing. A short-lived villainous character named The Noid was used to promote the fact that Domino’s could deliver a fresh hot pizza even on the coldest days. They were able to perform such a feat, when others struggled, because they invented a different type of pizza box. The message was not that Domino’s Pizza recognized the fact that no one wants a cold pizza and offered a remedy, but rather an annoying fictitious character was lurking in hopes of ruining your pizza. The Noid was short-lived marketing trend that caused more confusion than confidence.

One important attribute of a good company is the ability to learn from past experiences and change with the times. Domino’s quickly recognized a need to innovate, and once and for all solve the problem of cold pizza delivery. This time, however, Domino’s Pizza would show the world that they are the trendsetters from which all others grasp firmly the coattails. Crisper crust, bubbling cheese, and hotter topping were the new promise spoken loudly in Domino’s advertising. This was made possible by their invention of the HeatWave^® bag. This new technology, and the creative marketing, caused Domino’s competition to sweat. Once again, Domino’s became consumer centric and focused on a better customer experience as opposed to getting caught up in product and pricing battles.

Opportunities, the ‘O’ in a SWOT analysis, are seemingly limitless for Domino’s Pizza. They have been able to succeed in non-traditional markets by creating a cultural-specific product mix. Today there are over 8000 stores in 50 international markets. Although only producing what is classified as consumer products, the marketing considerations in all markets are the same—convenience. It is rare for a consumer to plan days in advance to have a pizza, but instead decides at a moments notice. The core benefit, at least from Domino’s perspective, is convenience.

A market niche competitor, California Pizza, has attempted to attract some of the frozen pizza consumers by offering variations of their most popular products. This seems to be a shortsighted attempt at trying to capture some of the market share. If Domino’s Pizza were to manufacture and distribute their product in the frozen food aisle, their current business would change. As with the California Pizza Kitchen product expansion, the original product is not viewed the same. While there are plenty of opportunities for Domino’s to grow, expanding their product offering beyond what can be produced and delivered in the same timeframe as their pizza would have a counter-effect on success in the market. Chicken wings and various deserts were added as an answer to a competitor’s advantage.

The final element in a SWOT analysis is the identification of threats in the market. Every competitor is recognized as a threat. Becoming too diverse with the product offering can also be perceived as a threat. In both cases, it is wise to understand the cause and effect associated with adding product, making marketing promises, and expanding into too many markets. There will always be a tipping point from which recovery is futile. A bad customer experience is no longer shared between a close-knit group of family and friends. Blogs can influence buying decisions and become a threat to the Domino’s brand.

Social media has become a huge part of society. The early adopters molded social media into a peer-to-peer communication channel. Unlike traditional broadcast mediums, social media offers two-way communication. An individual, or a business, can post information and receive instant feedback. This form of communication is a perfect fit for an impatient society. However, as Domino’s discovered in April 2009, social media can unravel many years of branding.

A video produced on a hand-held camera was posted on a popular social media site. The video contained disturbing footage of two Domino’s Pizza employees tainting products by various questionable unsanitary methods (Clifford, 2009). In only a few days, the video was viewed over one million times. The Domino’s Pizza brand was in serious jeopardy. Nearly fifty years after Domino’s Pizza was started, they found themselves under a microscope.

Domino’s marketing team used a proactive approach to thwart permanent damage. Quickly realizing the extent of the damage and the affected demographic, Domino’s created a Twitter account to handle the customer comments and introduced their own video featuring an explanation and public apology from the CEO. Domino’s ability to quickly adapt to a changing society afforded them the opportunity to devise a damage control plan and dilute a potentially devastating situation.

For the most part, the Internet has become the hottest new medium. Domino’s recognized the power of the Internet as a consumer conduit well in advance of their competition. They leveraged this new channel in 1996 by introducing the Domino’s Pizza website. Not nearly as sophisticated as the current website, and bound by the limited technologies of the early Internet, Domino’s used their first website to expand their brand and specific marketing messages across an untapped and unmeasured channel. In the same year the corporate website was launched, Domino’s boasted sales in excess of 3 billion dollars. Domino’s has become comfortable using the Internet as a marketing channel.

The ability to identify—and remain true to—the four Ps in their marketing mix is the primary reason Domino’s Pizza has endured and survived many decades of a fickle economy and a demanding consumer. Their product mix has evolved to include pizza, salads, sandwiches, chicken wings, and specialty desserts. The quality has been improved over the years, including a recent overhaul of their pizza crust and sauce recipes. Their brand name remains strong regardless of the recent challenges of managing public relations through social media channels.

Domino’s product pricing is competitive with others in the industry. Campaigns and promotions are designed to not only attract new customers, but also to retain existing ones. Over 8000 locations promise convenience for Domino’s consumers. It is difficult to find an area not identified serviced by a Domino’s Pizza franchise. Currently, Domino’s is positioned firmly within the market true to their original intention.

Consistency in products between franchises, reading the pulse of the consumer, and setting the pace for all others to follow is at the core of Domino’s success. The future will depend greatly on the ability of Domino’s marketing team to remain proactive, centered, and focused on the customers’ needs. It will always be important to realize shifts in the target market and leverage new opportunities to expand their customer base.

Domino’s has broadened and narrowed the range of ages of their target audience. During the second attempt at their “30-minutes or less” campaign, Domino’s concentrated on a target audience of 30 years old and younger. A critical marketing mistake was not realizing sooner that thirty percent of their original demographic—49 years old and under—remembered the first 30-minute guarantee in a positive light. The latest marketing efforts epitomize everything that Domino’s has strived to create. They will always position themselves to make decisions based not only on the traditional four Ps of marketing, but also from the viewpoint of their consumer. Using comments, criticism, and complaints as fuel—Domino’s recently introduced their pizzas reinvented. Domino’s has once again differentiated itself in the market. The pizza pendulum of success has swung toward Domino’s Pizza.

References

Clifford, S. (2009). Video prank at Domino’s taints brand. Retrieved January 25, 2010, from http://www.nytimes.com/2009/04/16/business/media/16dominos.html

Kotler, P. & Armstrong, G. (2008). Principals of marketing. Pearson Prentice Hall. Upper Saddle River, New Jersey.

Laukens, D. (2010). The history of Domino’s Pizza. Retrieved January 23, 2010, from http://www.recipepizza.com/the_history_of_dominos_pizza.htm

Miranda, E. (2009). Internet marketing – Franchises: Domino’s Pizza. Retrieved January 23, 2010, from http://www.wsicorporate.com/article/Franchises_dominos_pizza

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